The enduring equity-efficiency debate on India’s food policy revolves around two key issues—leakage of cereal grains from the system, and reduction in benefits at the extensive margin to reduce the fiscal burden. Using descriptive analysis and costing techniques, it is found that the public distribution system works well in regions with low market access, high cereal prices, and high poverty. It protects households from inflation through a price ceiling that automatically adjusts the value of the real implicit transfer. However, the biggest weakness is its one-size-fits-all approach.
