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Govt raises APL foodgrain prices by over 40 per cent by Ravish Tiwari


In a major decision that is likely to add to the double-digit food inflation, the government has quietly raised foodgrain prices for Above Poverty Line (APL) families by over 40 per cent.

The decision to this effect was taken at the meeting of the Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Manmohan Singh on December 30.

“The Committee considered the note dated 04/10/2010 from the Ministry of Consumer Affairs, Food and Public Distribution, Department of Food and Public Distribution and approved the proposal contained in paragraph 17 thereof,” read the minutes — dated January 4, 2011 — of the December 30 meeting, circulated by the Cabinet Secretariat.

Sources in Krishi Bhavan said ‘paragraph 17’ had proposed a hike of over 40 per cent for wheat and rice being distributed to APL families through the public distribution system. Accordingly, wheat prices would be revised up from Rs 6.10 per kg to Rs 8.55 per kg. Likewise, rice would be priced at Rs 11.85 per kg as against the current price of Rs 8.30 per kg.

However, with food inflation almost doubling during December, Agriculture and Food Minister Sharad Pawar was learnt to have asked the Food Department to keep the CCEA decision in “abeyance” until an appropriate time.

The sources could not confirm any move so far towards reversing the CCEA decision.

Food inflation shot up to 18.32 per cent for the week ended December 25 from 14.44 per cent in the previous week. The spike reflected inflation in vegetables (58.85 per cent), onions (82.47), fruits (19.99), milk (19.59) and meat (20.83). Cereals registered a marginal 0.53 per cent dip in inflation during this period.

With over 13.26 crore ration cards issued by state governments to APL households — against the 11.52 crore estimated by the Planning Commission — the decision is likely to affect a large population. The allocation of APL foodgrains stood at over 190 lakh tonnes last year; with the government releasing extra stocks lying with it, this is likely to go up this year.

However, the decision may ease the food subsidy burden of the government, pegged at about Rs 81,000 crore, including the arrears from previous years, as against the budgeted figure of under Rs 70,000 crore.

APL prices have been constant since 2002. The proposal for its hike has come before the Cabinet several times, but the government could never find the political will to do so.