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GTAP Resource #4183

"India’s food security policy in the era of high food prices: a general equilibrium analysis"
by Yu, Wusheng, Hans Grinsted Jensen and Jayatilleke Bandara

Background and introduction

Food grain production and consumption in India have been heavily influenced by government interventions with the overriding objectives being securing food grain self-sufficiency and providing/distributing subsidized food grains to its poor large population. The India government generally insulates its domestic market from the international market through higher border protections such as high import barriers and/or support for exports (or export restrictions when world market prices are high). Minimum support prices (MSPs) for key agricultural commodities have been used to fix prices at farm gate and consumer levels. To sustain the targeted MSPs, key agricultural inputs such as fertilizer and fuel are heavily subsidized. Public stockholding and state trading also important in regulating domestic demand and supply balance to achieve a targeted level of public stock and of dispersing food grains through its targeted public distribution system (TPDS) to poor consumers. On the consumption side, in recent years the TPDS has provided subsidized wheat and rice to poor consumers at the so-called central issue prices (CIPs).

The high fiscal costs of these interventions have been further increased during recent episodes of high world food prices. Jones and Kwiecinski (2010) esimate these costs to be as high as 19% of India’s fiscal revenue. This is because to curb the transmission of higher world market prices to the domestic markets, trade restrictions had to be put in place. To compensate for the rising input costs, the MSPs also needed to be increased together with increased spending on input subsidies. On the consumption side, higher procurement prices for the TPDS under stable CIPs implied much higher spending on providing subsidized grains to poor consumers.

While India’s policy responses to the recent world food price crisis have been monitored at the international level (such as the OECD and the FAO), they have not been dis...

Resource Details (Export Citation) GTAP Keywords
Category: 2013 Conference Paper
Status: Published
By/In: Presented at the 16th Annual Conference on Global Economic Analysis, Shanghai, China
Date: 2013
Created: Yu, W. (4/15/2013)
Updated: Yu, W. (4/15/2013)
Visits: 1,895
- Agricultural policies
- Domestic policy analysis
- Food prices and food security
- Asia (South-Central)

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