New Delhi: The government has reduced grain rations under the public distribution system and also raised grain prices for all but the poorest households. The cut is likely to reduce the Centre's food subsidy bill by Rs4,524 crore a year.

Differences within the Cabinet forced the government to drop a proposed increase in the issue price of grain for families below the poverty line, even though it raised the issue price for rice by 85 paise a kg and for wheat by 95 paise a kg for the rest.
The central issue prices of grain were last revised in July 2001.

The Cabinet also decided to cut the monthly grain entitlement for families below the poverty line by 5 kg to 30 kg a month. Beneficiary families above the line will now be entitled to a monthly ration of 20 kg instead of 35 kg.

The Centre had budgeted for a food subsidy bill of Rs26,200 crore in 2005-06. Though the impact of today's changes will be felt only during the last quarter, it could result in a saving of over Rs1,000 crore this fiscal year.

With families below the poverty line and those covered by the Antyodaya Anna Yojana also getting food benefits under rural employment programmes, the government feels the lower rations are adequate to meet the nutritional requirements of poor households.