Food Subsidies Would Help South Asia Cope With Food Price Hikes

Posted March 19th, 2012 at 12:45 am (UTC-5)
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The Asian Development Bank says a price hike in food staples, like rice and wheat, could push tens of millions more people into extreme poverty in South Asia.

But a new study by the ADB says food subsidies targeted at the poorest in the region would help them cope with increased food costs.

In a report outlining the findings the bank says South Asia’s high population growth and the large number of people already living on or close to the extreme poverty line of $1.25 a day makes the area one of the most vulnerable regions in the world to food price spikes. The report says low-income South Asian families already spend half of their money on food.

ADB economist Hiranya Mukhopadhyay, author of the report, says subsidizing the cost of a basic meal for the poorest and most vulnerable in places like India means “the help goes to those who need it the most without putting an excessive burden on government finances.”

The report, Food Price Escalation in South Asia – A Serious and Growing Concern, notes that after peaks in 2008 and 2011, the prices of key food commodities have eased, but the rate of decline has been slower in South Asia than the rest of the world.