The public distribution system, which provides food at low prices, is a subject of vital concern. There is a growing realization that though Ethiopia has enough food to feed its masses two square meals a day, the monster of starvation and food insecurity continues to haunt the poor in the country. Increasing the purchasing power of the poor through providing productive employment leading to rising income, and thus good standard of living is the ultimate objective of public policy. However, till then, there is a need to provide assured supply of food through a restructured, more efficient and decentralized public distribution system (PDS). Although the PDS is extensive - it is one of the largest such systems in the world - it has yet to reach the rural poor and the far off places. It remains an urban phenomenon, with the majority of the rural poor still out of its reach due to lack of economic and physical access. The poorest in the cities and the migrants are left out, for they generally do not possess ration cards. The allocation of PDS supplies in big cities is larger than in rural areas. In view of such deficiencies in the system, the PDS urgently needs to be streamlined. In addition, considering the large food grains production combined with food subsidy on one hand and the continuing slow starvation and dismal poverty of the rural population on the other, there is a strong case for making PDS target group oriented. The growing salaried class is provided job security., regular income, and percent insulation agaifl inflation. These gains of development have hot percolated down to the vast majority of our working population. If one compares only dearness allowance to the employees in public and private sector and looks at its growth in the past few years, the rising food subsidy is insignificant to the point of inequity. The food subsidy is a kind of D.A. to the poor, the self-employed and those in the unorganized sector of the economy. However, what is most unfortunate is that out of the large budget of the so-called food subsidy, the major part of it is administrative cost and wastages. A small portion of the above budget goes to the real consumer and an even lesser portion to the poor who are in real need. It is true that subsidies should not become a permanent feature, except for the destitute, disabled widows and the old. It is also true that subsidies often create a psychology of dependence and hence is habit-forming, killing the general initiative of the people. By making PDS target group oriented, not only the poorest and neediest would be reached without additional cost, but it will actually cut overall costs incurred on large cities and for better off localities. When the food and food subsidy are limited the rural and urban poor should have the priority in the PDS supplies. The PDS should be closely linked with programs of employment generation and nutrition improvement.
Q:Food subsidy leads to which of the following?
