The Centre is considering raising the prices of wheat and rice distributed through ration shops to bring down its food subsidy bill.
Before 2010, proposals to increase the price of grains sold through ration shops for above poverty line (APL) families were placed before the cabinet once almost every six months, without any success. The price has not been changed since 2002.
Experts believe the proposal might be more difficult to implement this time, as the proposed Food Security Bill promises grain at rates cheaper than the current rate at which they are sold at ration shops. “As the Food Security Bill is under works, there is very little ground to raise prices now,” said a senior official.
The food Bill, being vetted by a standing committee of Parliament, proposes to give seven kg of grain per person per month to every priority sector household and three-four kg to general category households. To priority sector households, rice would be distributed at Rs 3 per kg, wheat at Rs 2 per kg and coarse cereals at Rs 1 per kg. To general category households, grain would be distributed at a price related to the minimum support price.
In the first week of January 2011, the cabinet had okayed a food ministry proposal to increase the price of grain sold through ration shops for APL families by 40 per cent. However, the move was rolled back within a week, following strong opposition from political parties.
The decision to raise the price swas taken at a meeting of the cabinet committee on economic affairs, chaired by Prime Minister Manmohan Singh, on December 30. Accordingly, wheat prices were raised from Rs 6.10 per kg to Rs 8.55 per kg. The price of rice sold through ration shops for APL families was raised from Rs 8.30 per kg to Rs 11.85 per kg.
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The rise was later rolled back. Currently, wheat is sold to below poverty line (BPL) families at ration shops at Rs 4.15 per kg, while rice is sold at Rs 5.65 per kg.
Cheap grain is given to almost 65.2 million BPL and over 110 crore APL families through a network of over 500,000 ration shops.
The finance ministry has pegged food subsidy for 2012-13 at Rs 75,000 crore, just around three per cent more than last year’s Revised Estimates. Officials said with the overall subsidy bill ballooning, the ministry was under immense pressure.
An empowered group of ministers had recently rejected a food ministry proposal to allocate an additional 26.5 million tonnes of grain to states, over and above their usual allocation for the public distribution system because it entailed bearing an additional subsidy of over Rs 32,000 crore.