NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Tuesday, August 12, 2014

India is making essential changes to the way that it operates its food aid program for the poor. Essentially, instead of trying to provide food itself to poor people give them money so that they can purchase food. This is in accord with the basic point about poverty: which is that poor people don’t have enough money. So, if you give them some money then you’re aiding them out of that poverty. There are also wider public policy implication than just that as Raghuram Rajan, India’s central bank Governor has made clear in a speech on the subject:

“Indian central bank Governor Raghuram Rajan urged the government to directly transfer cash to the poor instead of offering public services, saying the money would liberate millions from corrupt middlemen and politicians.”