In India we see lots of people in this condition. As you mentioned in the past, I also prefer buying them food or any other basic need instead of directly giving money. There is a high possibility that they can misuse the money we give them. I do give money directly but only in unavoidable circumstances.
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Can't really blame them if they spend money on drugs, as that is their only way of coping with their sad reality. I prefer offering a meal, a drink or a piece of clothing because I think it would help more than some spare change.