Distributing food in India and China: learning from experience

Many governments use public distribution systems to make food available at reasonable rates and guarantee food security for their citizens. The experiences of India and China offer insights for all developing countries.

There are363 million undernourished people in India and China (two-thirds of whom are inIndia). Both countries face similar problems: a huge population, limitedagricultural resources and unstable world markets that threaten national foodsecurity. Food production has improved recently, but both countries still needsystems to support people facing food insecurity. Research from the UnitedNations University compares the food public distribution systems (PDS) in Indiaand China.  

In India,the government has used private markets and PDS to distribute food at fixedprices. In China, the state bought grain to supply to people issued with rationcards.

Keycharacteristics of the PDS include:

• TheChinese state monopolised grain marketing, assuming responsibility for feedingthe entire registered urban population. In India, the state handles less than10 percent of grain production.
• TheChinese PDS favoured the registered urban population, irrespective of wealth,although they also issued ration cards to rural people not producing enoughgrain. The Indian system provided subsidised food to both rural and urbanpeople.
• ThePDS in both India and China have significantly contributed to national foodsecurity, particularly by maintaining stocks of grain to protect againstdisasters.

Thesesystems are effective because they make food available at reasonable rates to peoplewho do not produce their own food, those who do not produce enough and thosewho cannot afford market prices. However, both of these systems are veryexpensive for the state, as food is supplied to consumers below market costs.

Furthermore,as both countries became economically stronger, PDS changed. China tried toreduce its subsidy by allowing its PDS to disintegrate in the 1990s, andreforming its social security system to provide cash transfers to those inneed. India chose not to remove its subsidy, but tried to contain it by makingthe PDS more efficient and reaching poor people more effectively, introducing theTargeted Public Distribution System in 1997.

Allcountries, including China and India, can learn lessons from these experiences:

• Afood subsidy can be a cheap and effective form of social security for poorpeople.
• Acountry’s level of development should help to determine the form of socialsecurity. A shift from food subsidy to cash payments can only take place if itis cost-effective, as in China. At present, India should retain the targetedPDS.
• Abuffer stock of food reserves, controlled by the central government, isessential to deal with market fluctuations and any large-scale food shortages.
• Indiacould learn from China in managing its buffer stock more flexibly, for exampleby exporting excess stock or using it for processed food or animal feed.