PDS inefficient, money transfers better solution

Written by fe Bureau | pune | Updated: Jan 21 2013, 02:24am hrs
Noted economist Abhijit Banerjee on Saturday criticised the current functioning of the public distribution system (PDS) as inefficient.

Food is being lost at every step and we are not sure if the benefits reach the people they are meant for, he said. Banerjee was responding to a query on whether some of the poor were taking undue advantage of the governments beneficiary schemes. In such a scenario, cash transfers would be a better solution, he felt. Banerjee was delivering the First Suresh Tendulkar Memorial Lecture hosted by the College of Agricultural Banking and Reserve Bank of India on the topic Identifying the Poor.

Banerjee, who is a professor of economics at the Massachusetts Institute of Technology, US, was of the opinion that the self-selection method was the best approach towards identifying poverty since this method did a better job of differentiating the poor and the rich.

RBI guvs remarks dampen hopes of rate cut

Ahead of a monetary policy review on January 29, RBI governor D Subbarao spoke of poverty and high food inflation in remarks interpreted as dashing hopes of a rate cut later this month. He said lower segments of the society, which spend a greater proportion of their budgets on food, were more concerned about high food inflation. We need to improve our understanding of the poor and poverty, Subbarao said.