Abstract
This paper examines the cost involved and effects of government interventions in foodgrain markets in India. It is observed that although these interventions have not been able to reduce price spread, tangible successes in temporal and seasonal price stabilization and increases access to food have been achieved. However, the public distribution of foodgrains has exhibited urban bias, particularly for wheat, and is inconsistent with the incidence of poverty. Freight and interest payments have contributed largely to the cost and hence accentuated the rate of subsidy. The keys to reducing food subsidies are strict targeting of public distribution to people below the poverty line in resource-fragile regions, relief work, rational movement of foodgrains, sale of excess foodgrains to a buffer stock and public distribution in the open market at an economic price.
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