Looking to the government-run Public Distribution System (PDS) to beat rising food prices may not remain such a good option.
The government is set to increase the prices of food grains available to Above Poverty Line (APL) families considering the increasing burden of food subsidy.
There are 11.52 crore APL families in India that buy food grains at a subsidised price of Rs 8.50 for a kg of rice and Rs 6.50 for a kg of wheat, plus the transportation cost from the nearest Food Corporation of India's store to a PDS shop.
This means a subsidy of Rs 10 for a kg of rice and Rs 9 for a kg of wheat. The total cost to the government in 2008-09 is Rs 15,400 crore.
"With the increase in minimum support price for wheat and rice the subsidy burden for the government on account of APL families is expected to cross over Rs 20,000 in this financial year," a government official, not willing to be quoted, said.
The Food ministry has now asked an empowered Group of Ministers (eGoM) to increase the price of food grains for the APL families under the PDS system. The ministry has proposed a hike of up to Rs three per kilogram, the official said. The eGoM has powers to decide on behalf of the Union Cabinet.
The move is also aimed at cushioning 6.52 crore people below poverty line from the impact of rising food prices.
In the last nine months, the food prices have risen by 40 to 80 per cent but the government wants to provide wheat and rice at the existing rates.
Wheat is priced at Rs 4.15 and rice for Rs 5.65 plus transport costs to BPL families. The poorest of the poor identified as antodaya families get rice for Rs 3 and wheat for Rs 2.