LAHORE, April 28: The Punjab government may not increase the wheat price from Rs350 per 40kg for the next season because charges have come down substantially due to reduced mark-up on loans.

Sources in the provincial food department said on Wednesday that the government was considering a proposal in this regard and a decision might be announced in a week.

The policy of fixing release price was introduced last year and Punjab is the only province following it. Under the policy, the food department sold wheat at Rs350 after buying it at Rs300 per 40kg.

An official said the government had to cascade the support price to avoid market distortion. For this reason, it had to increase the release price to Rs350, he said, adding that this year it had no such compulsions. It received loan at a mark-up of 1.74 per cent, which brought down its incidental spendings to around Rs700 per ton, while it used to be over Rs1,400.

The government is considering proposals to issue wheat at the same price on which it is procured, Rs358 per 40kg, or to cap it at Rs350 per 40kg. If the government keeps the current price of Rs350, it may have to pay the department a subsidy of around Rs2 billion, which is half of the historical subsidy of Rs4 billion.

The department could reduce its subsidy by at least 25 per cent by issuing wheat to other provinces, the official said. In that case it might not have to launch the 'sasta atta' (cheap flour) scheme, he said.

The government, he said, had saved around Rs275 million last year due to the policy but urban consumers paid a heavy price and the trend this year did not seem to be different. He said the government was considering different options for protecting the consumers from profiteers of the private sector and it did not want to be seen making money from the wheat business.

The current policy of banning wheat movement and achieving food security targets was a part of the policy. He said that Sindh and Balochistan were supporting Punjab's effort to purchase 3.5 million tons of wheat so that everybody was comfortable in the next season.