CHENNAI: The State Government is all set to launch Rs. 2 a kg rice scheme for ration cardholders under the public distribution system from June 3, the birthday of Chief Minister M. Karunanidhi.

Tamil Nadu is the only State to supply rice to cardholders at such a low price, involving heavy subsidy burden to the exchequer.

At present, the average monthly offtake of rice under the PDS is 2.65 lakh tonnes. With the reduction in price from Rs. 3.50 to Rs. 2 a kg, it is likely to go up. Officials hope it will cross three lakh tonne a month.

The Government expects the subsidy burden due to the price reduction will increase by another Rs. 500 crore. According to officials, however, the burden will increase at least by Rs. 1,000 crore per annum.

Boon for poor

The scheme will be a boon for the poor in the rural and semi-urban areas who, at present, do not have money to buy the entire quota of 20 kg a month. A majority of cardholders purchase only 10 to 15 kg. Now, this section will be able to purchase the entire quota, thanks to the reduction in price.

Even if there is an increase in the offtake, the State has no reason to worry as it is entitled to about 4.73 lakh tonnes of rice a month from the Central pool under various schemes.

At present, it lifts only 2.5 lakh tonnes, officials say.

Additional quota

It may have to increase the additional quota from the Central pool if there is increase in the offtake.

It has now a combined stock of about 10 lakh tonnes of rice both in the Food Corporation and the Civil Supplies Corporation, which will meet the demand for the next three to four months.

The main worry now is how to prevent the diversion of PDS rice.

According to a Central Government survey, about 25 per cent of PDS rice is smuggled into the open market, mostly to Andhra Pradesh.

As the open market price is about Rs. 10 a kg, a profit of at least Rs. 5 a kg is assured.

The price reduction will make the smuggling of ration rice more profitable, ultimately leading to heavy diversion.

Strict vigilance

Hence, the Civil Supply Department has decided to tighten vigilance at State borders to curb smuggling, the officials added.

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