The Telegraph
Since 1st March, 1999
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Subsidy bulge shrinks ration

New Delhi, Jan. 6: The government today reduced the allotment of foodgrain through the public distribution system (PDS) for all families and raised prices selectively.

The move, the government said, would bring down the food subsidy bill by Rs 4,524 crore ' almost 15 per cent lower than the existing Rs 26,200 crore a year.

Left parties expressed immediate objection, threatening a nationwide agitation and asking why the government had not consulted them before taking such an important decision.

Announcing the decision after a meeting of the cabinet committee on economic affairs, defence minister Pranab Mukherjee said families below the poverty line would now have a monthly PDS quota of 30 kg against the existing 35 kg a month. But the price would stay the same.

Other families can buy 20 kg of foodgrain a month, 15 kg less than the present quota. For them, the issue price of wheat would be Rs 705 a quintal, while rice would cost Rs 915 a quintal.

Officials said the government was forced to raise the prices as the economic cost ' the price at which grain is bought plus the cost of storing it and the interest paid on money blocked in grain dealing ' had shot up.

However, critics say the decision does not make sense as the government would now be left holding a larger pile of foodgrain. With lower supplies to ration shops, the already bursting food silos would simply grow fatter.

Mukherjee said since 2003, the issue prices of wheat and rice, fixed in 2000, have not been revised despite procurement costs escalating every year.

The Left demanded reversal of the decision, saying it would take up the issue at the meeting of the coordination committee with the United Progressive Alliance.

CPM general secretary Prakash Karat said: “This is not what we expected of the government. They should have consulted us on an important issue like this. We will definitely take it up and agitate on it.”

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