New Delhi, Jan 6: The Ministry of Food and Consumer Affairs has proposed a whopping 60 per cent hike in the price of wheat supplied through the ration shops under the public distribution system (PDS). The proposal, if finally accepted by the Government, will result in a saving in the subsidy bill for wheat alone of Rs 1,600 crore.The proposal envisages increasing PDS issue prices of wheat from Rs 4.5 per kg to Rs 7.27 per kg for those people above the poverty line (APL), and from Rs 2.50 per kg to Rs 4.04 per kg for those below the poverty line (BPL). Of the total of around 75 lakh tonnes of wheat which are supplied through the PDS, roughly 40 lakh tonnes go to those above the poverty line and 35 to those below it.The ministry's suggestion for hiking prices is far above the increase in procurement prices or what the farmers are paid for their produce - the last hike in March last year was around 7 per cent, when prices were raised from Rs 455 per quintal to Rs 505. Normally, the Government does notincrease issue prices by amounts significantly higher than the increase in procurement prices.The ministry's contention, however, is that while the current hike proposed is far larger than the hike in procurement prices, over the years, the situation has become untenable. In the current year (1998-99), the total food subsidy is expected to be Rs 6,800 crore on account of the difference between procurement and issue prices alone, and another Rs 1,900 crore for carrying costs by the Food Corporation of India (FCI).Of the total of Rs 8,700 crore, roughly Rs 3,300 crore is on account of subsidised rice and the balance for wheat. Under the rationale prepared by the Food Ministry, those above the poverty line should be supplied foodgrain at 90 per cent of the economic cost, and those below the poverty line should be given grain at half its economic costs. The prices given in their new proposal are based on this rationale.It is understood that the Government is somewhat reluctant to clear such a sharp hike,particularly since prices of primary articles have shot through the roof recently, and played a significant role in the recent defeat of the BJP in the assembly elections. The Food Ministry has been asked to re-work its numbers, but it is believed that it will recommend only a marginal lowering of the earlier prices recommended by it.
