NEW DELHI: The Cabinet Committee on Economic Affairs will take a view on the proposal to hike the price of wheat in the Targeted Public Distribution System to about Rs. 5.60 a kg for the Below Povertyline (BPL) population and about Rs. 7.85 a kg for the Above Povertyline (APL) population.

The price of rice is also likely to be raised to slightly less than Rs. 7.00 a kg for the BPL and about Rs. 9.75 a kg for the APL. This is about 50 per cent for BPL and 70 per cent for APL of the economic cost of the procurement price, transportation and storage of wheat to the Food Corporation of India. For the Antyodaya Anna Yojna beneficiaries, the cost of wheat will remain Rs. 2 a kg and Rs. 3 a kg for rice.

The justification for the proposed price hike is to close the gap in the price of PDS and open market grains to plug diversions. The hike may bring about a subsidy saving of over Rs. 5,000 crore, but the additional requirement for partially replacing the foodgrains with cash in the Sampooran Gramin Rozgar Yojna will be around Rs. 600 crore. Besides this, the States concerned will be allocated more coarse grains and rice to partially replace the PDS wheat quota.

According to sources, the wheat buffer norm next April will be short of 30 lakh tonnes. Already at 92.2 lakh tonnes, wheat procurement this rabi season has fallen way short of the target of 162 lakh tonnes. Private and multinational companies have cornered about 60 lakh tonnes of wheat this year.

The production figures for wheat have been revised downwards to 68.6 million tonnes for 2004-05. This year's wheat output has also been lowered from 73 million tonnes to 71.5 million tonnes.

The last time the Food Ministry made such a proposal was before the recent elections in the four States and a Union Territory. The proposal was cleared by the Union Cabinet but was later put on hold when United Progressive Alliance chairperson Sonia Gandhi and the Left parties opposed it. This time around, however, Food and Agriculture Minister Sharad Pawar is likely to drive a hard bargain with his Cabinet colleagues and supporting parties — fall in line or be ready for a larger import of wheat. Either way, consumers are in for hard days.

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