The Centre has revised rates payable to states and Union territories as central assistance for meeting increased costs of operations of the public distribution system, which provides subsidised food handouts to nearly 800 million food-insecure people, about two-thirds of the population, according to a notification.

In a relief to states, the revised norms for payments take into account increased costs of food distribution due to higher inflation. Consumer inflation quickened to an eight-year high of 7.79% in April, according to latest available data. Foodgrain transportation costs are up 26%, a major expense in PDS operations on the back of higher fuel costs.

The revised rates are however applicable to those state governments and Union territories which have complied with various reforms, such as digitisation of the PDS. A key reform is the transition to the One Nation, One Ration Card portal, available across the country. The system allows mobility of in-kind benefits, such as food subsidy.

Digitisation of the PDS, which is a basically the network of 500,000 fair-price outlets, allows a beneficiary, such as a migrant worker, to access her share of subsidized ration from anywhere in India regardless of the place where the ration card is registered. In other words, it allows full mobility of food entitlements.

The revised rates are aimed at meeting expenditure towards intra-state movement and handling of foodgrains as well as margins paid to fair price shop dealers under the National Food Security Act, 2013, an official said, requesting anonymity.

For general category of states, the Centre’s share in expenditure is pegged at 50%, while for special category states, such as hilly states and the Northeast, it is 75%.

According to the revised norms, transportation costs for general category states have been hiked 7.6% from ₹65 to ₹70 a quintal (100kgs).

Cheap foodgrains for beneficiaries are dispensed by nearly 500,000 fair-price shops, which are the backbone of the PDS system and run on a commission basis. The operating margins of these shops, often located in remote regions, have been increased from ₹70 to ₹90 a quintal, a sharp increase of 28.5%, according to the notification.

Additionally, most fair-price shops have now installed electronic point of sale devices used to allot foodgrains to the poor. They get an additional margin, which has been hiked from ₹17 to ₹21 a quintal.

For special category states, charges for fair-price shops have been upped from ₹143 to ₹183 a quintal.

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