New Delhi: It is expected to rain more reforms as the Union Cabinet is set to meet on Monday. A massive overhaul of the Public Distribution System is on the cards. Sources say the government is likely to pump in Rs 42,000 crore to check the leakage in the system. The system is said to be having a leakage of almost 62 per cent. Under new system, the consumers will receive SMS alerts about ration stocks.
An announcement on the hike in sugar rationing is also expected. Concerned over high retail prices of sugar, an inter-ministerial group on inflation had suggested that the food ministry should release more quantity in the open market and allocate the sweetener for six months instead of the present quota system of three months.
The members of the Inter Ministerial Group (IMG), headed by Chief Economic Advisor Raghuram Rajan, in its meeting earlier this month had agreed that the government should widen the regulated sugar release mechanism system to six months with higher allocation of 10 million tonnes for free sale, sources said.
Of late, the Food Ministry has been fixing the quota of non-levy sugar (meant for sale in the open market) on quarterly basis. In the first two quarters of this fiscal, it has allocated about nine million tonnes.
The sugar sector is controlled by the government. Under regulated release mechanism, the food ministry fixes the quantity of sugar that mills can sell in the open market as well as through public distribution system (PDS).
The IMG members had expressed concerns over the near 20 per cent increase in retail prices of sugar in the domestic market in the last three months, while rates in the global markets were moderating, sources added.
Food Minister K V Thomas had told Parliament in its monsoon session that sugar prices remained stable up to June, 2012 but had started showing an upward trend from July, 2012 onwards.
The Cabinet may also consider the debt restructuring of state power companies. A pre-Diwali bonanza could also be in store for the Central government employees. But there is no clarity yet on whether the proposal for raising the cap on FDI in Insurance will be cleared on Monday.
Monday's will be the first meeting of the Cabinet after the Trinamool Congress ministers resigned from the UPA government. The attempt seems to be to reach out to the aam aadmi after the Opposition accused the government of catering to the demands and needs of the industry.
The government may also pump in a lot of money into the Integrated Child Development scheme. The government is expected to pump in Rs 1.25 lakh crore to build around 7 lakh new anganwadis.
Prime Minister Manmohan Singh had on Friday gave reasons due to which the government cleared FDI in multi-brand retail, single-brand retail, aviation, broadcasting and power exchanges.
In his address to the nation, the Prime Minister had said that no government wants to burden the common man, but it is necessary to regain the confidence of the investors.
The Prime Minister said that the economic reforms were needed to create employment for the youth of the country, adding that the foreign direct investment (FDI) reforms would benefit the farmers.
He also asserted that it was wrong to say that small traders would get impacted by FDI in retail, saying it would in fact improve employment prospects in the country.
Referring to the fuel price hike, the Prime Minister pointed that while the subsidy on diesel was Rs 17 per litre, there was a hike of just Rs 5 per litre.
The Cabinet allowed 51 per cent FDI in multi-brand retail, and permitted FDI, up to 100 per cent, in single-brand retail trading, subject to specified conditions.
In another major decision, the government had approved FDI in aviation, allowing up to 49 per cent investment. The decision means that foreign airlines will now be allowed to invest as much as 49 per cent in the Indian carriers. However, this won't be automatic as the companies will have to get clearance from the ministry and FIPB.
(With additional information from PTI)