The focus of attention in the immediate aftermath of the diesel price decontrol has been on the Kerala State Road Transport Corporation (KSRTC), but the State’s famed public distribution system (PDS) might be in greater peril with the possibility of prices of essentials shooting through the roof.
The PDS figures high up among the 126 State and non-State controlled activities/agencies that the government has identified as possible impact points of the monthly diesel price hike. The State PDS is dependent on essentials sourced mainly from Andhra Pradesh, Karnataka, and Tamil Nadu. With the transportation costs going up, the State would have to cough up more money for its procurement operations. This is bound to result in a ballooning of the subsidy bill and an increase in the subsidised prices of these commodities.
While a one-off increase in diesel price can be tackled by raising the subsidy allocation, the proposed monthly increase in diesel price would make any definitive allocation virtually impossible. With each price increase, the transportation costs would spiral and that cannot but wreak havoc with the State’s subsidy system. Official sources told The Hindu here that the present subsidy allocation itself would have to be raised by at least by 10 to 20 per cent to cushion the effect of the proposed monthly diesel price hike in the near future.
Fair price outlets have already begun experiencing scarcity of many of the essentials, mainly rice, which the government is committed to distribute to hold the price line. Regular suppliers had begun to tighten their supply lines and, with no measure so far to replenish the subsidy kitty, the situation was likely to take a turn for the worse in the coming days, official sources said.
Besides the PDS, the 126 vulnerable activities/agencies identified by the government also included Malabar Cements Limited, Steel and Industrial Forging Limited, Indian Rare Earths Limited, FACT (Kochi division), Kerala Minerals and Metals Limited, Travancore Cements Limited, Travancore Titanium Products, Hindustan Organic Chemicals Limited, Southern Railway, VSSC Unit No. 1, BrahMos Aerospace, and Brahmapuram diesel plant.
There were also entities in the private sector in the government list, including hospitals, hotels, and fishery units, sources said.
