Savings from reduced subsidy spending are used to reduce direct taxes uniformly for all household types. The targeting of all food subsidies is pro-needy, in part due to important indirect effects. It raises the consumption of the needy by 0.5 percent with, on average, little change for the nonneedy. The overall policy implication of the paper is that there is scope for reducing food subsidy spending without hurting the low-income groups. Download full-text discussion paper .
Proper citation is required.