On the table today: fuel price hike, cuts in ration subsidies

TOMORROW is a crucial day for the UPA government as a Group of Ministers has to recommend between annoying either the middle income group through an increase in fuel prices or those living above the poverty line (APL) by keeping them out of ration shops.

With the subsidy bill touching Rs 1 lakh crore, the Cabinet mandated a GoM headed by Defence Minister Pranab Mukherjee to consider an increase in the central issue price of foodgrain sold through the public distribution system. It also asked the same group to consider increasing prices of petroleum products.

That meeting is fixed for tomorrow with the Food Ministry proposing that food subsidy be prevented from crossing Rs 26,000 crore by weeding out APL families from PDS or cutting their ration quantity to 10 kg per month from present 35 kg.

The other option offered by the ministry is to raise the issue price for APL families to 70 percent of the economic cost that would include minimum support price and bonus paid to farmers, transportation and bagging cost. This, the ministry says, should not be done in one go but through an increase of Rs 1 per kg every year.

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Image and Article source: Indian Express
Article taken from the issue: 17 Jan 2008