Poverty and Social Protection in Urban India: Targeting Efficiency and Poverty Impacts of the Targeted Public Distribution SystemThe Indian Journal of Labour Economics

This paper draws on household survey data in two Indian cities, Delhi and Ranchi to study key issues related to poverty and social protection in urban India. We consider the case of targeted public distribution system (TPDS) in India to assess the efficiency in targeting for the intended beneficiaries in greater need of such support, the likely welfare impacts of mis-targeting, and the potential poverty impacts that have been made possible by the implicit income transfers through subsidised provisioning of foodgrains. Our results indicate significant extent of targeting errors, and that the emerging indications of progressive gains from the existing programme could be further improved upon if exclusion errors, in particular, are reduced. We further show that due to the progressive nature of utilising the TPDS programme, and benefiting from the price subsidies, the poverty headcount ratio fell by about two-three percentage points in both the cities. However, our results suggest that certain forms of deprivations—mostly in terms of non-income dimensions such as basic amenities—tend to be ignored in identification of the intended beneficiaries in need of protection, and that the welfare gains could be enhanced if identification mechanisms are made broad-based enough.

This article is part of a special issue on informal employment in China and India with special editors, Jeemol Unni and Alakh N. Sharma.