States PDS wheat quota cut by 63%

New Delhi, Aug 29 | Updated: Aug 30 2006, 05:30am hrs
The Centre has cut monthly wheat allocation under the targeted public distribution scheme (PDS) by 63% to 8,72,000 tonne on account of low stocks, a government official said on Tuesday. The cut in allocation was effected from June, he added.

In May, wheat offtake by states under the targeted PDS was 1.04 million tonne. The cut in wheat allocation is alarming as it is now much lower than the usual offtake.

The total food grain allocation to states has also been cut by 23% to 4.49 million tonne. The official added the cut in food grain allocation, particularly wheat, is aimed at conserving the fast dwindling government stocks.

As on August 1, the government had 7.33 million tonne wheat, down 43% on year, while total food grain stocks stood at 17.46 million tonne, down 19% on year.

To make the stocks last till March and ensure that there is still some wheat left for buffer stock for next year, the government has started importing the cereal as well as cut down on allocation under state-run schemes, the official explained.

India is already importing 3.83 million tonne wheat, and is likely to float tenders to import 1.67 million tonne more by February end to achieve its target of importing a total of 5.5 million tonne in the current financial year.

Steps Taken

The Centre cut monthly wheat allocation under the PDS to 8,72,000 tn
This move is alarming as it is much lower than the usual offtake
Wheat allocation to APL families has been cut by 88% to 1,83,995 tn, while that to BPL families by 15% to 4,40,728 tn

The official added the largest cut in wheat allocation has been made for the above poverty line (APL) families, as per the recommendations of a Parliamentary panel.

Wheat allocation to APL families has been cut by a whopping 88% to 1,83,995 tonne, while that to below poverty line (BPL) families has been cut by 15% to 4,40,728 tonne. For Antyodaya Anna Yojana, it has been slashed by about 10% to 2,47,291 tonne.

The official said the government has instead increased rice allocation to states to over 3.6 million tonne from about 3.5 million tonne each in April and May.

In Karnataka, Gujarat and Madhya Pradesh, it has started allocating coarse grains such as ragi, maize and jowar to cut down on wheat provision.

As a result, coarse grain allocation has been scaled up to over 37,000 tonne from June from about 8,000 tonne each in April and May.

CRISIL MarketWire