11/06/2008 (The Financia Express), New Delhi - The government plan to distribute cheap imported edible oil to poorer sections through public distribution system (PDS) for offsetting the impact of spike in domestic prices could fall flat as most states have shown little interest in lifting oil from purchasing agencies.

According to official sources, only two states have shown interest in distributing subsidised edible oil through its PDS as international prices of edible have softened since April 2008, when the scheme was first announced by Union minister for agriculture Sharad Pawar.

Pawar had said the government would import additional one million tonne edible and distribute with a subsidy of Rs 15 per litre through public distribution system for ensuring availability to poorer sections.

“Because of softening of the prices there might not be any takers from the states for the subsidised oil scheme,” official sources told FE. The sources said that because of low subsidy component, the states are not willing to take up distribution of edible oil through PDS.

“The states also need to incur extra expenditure for storing and distributing the imported edible oil through PDS,” an official with the ministry of agriculture said.

In April, the government had asked state procuring agencies such as PEC, MMTC and NAFED to import one million tonne edible oil for checking the rising prices of the essential commodity. Many procuring agencies have already completed atleast one round of the tendering process. “Procuring agencies may not go for the second round due to lack or absence of demands from the states,” the official said.

Out of the 12 million tonne of edible oil consumption in the country, more than 5.5 million tonne is imported. Soyabean oil imports from Argentina and Brazil touch about 2 million tonne while about 3.5 million tonne of palm oil is imported annually from Malyasia and Indonesia.

The prices of edible have seen a sharp rise in the last one year due to increase in palm oil prices. In a bid to curb rising prices of edible oil, the government, in March, had announced an import duty cut on crude palm oil from 45 to 20% and that on refined palm oil from 52.5 to 27.5%.