The new government's big priority is tackling inflation, chiefly food inflation. One option often suggested is simply releasing some of the foodgrain stocks held by the government at a low price or even free. Isn't this better than allowing the grain to rot or be eaten by rats?
Well, the answer is not that simple. Kaushik Basu, former CEA, made the point in 2011 in an article in EPW. If the government unloads grain at below the market price, traders will buy it up and sell at the market price through their shops, making a neat profit! So, this won't work.
How do we reach food to the poor at subsidised priecs. The public distribution system has leakages but some states have managed to plug these effectively (Tamil Nadu and Chattisgarh). The answer that Basu proposes is giving food stamps to the poor. They can use the stamps to buy from any private shop. There could be a problem here. What if the market price spirals out of control? Will the poor get adequate food, then, using food stamps? Working to plug leakages in the PDS using IT might be a better option for now.
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