After today's decision -- to be ratified by the Cabinet soon -- ration shop prices for wheat for BPL population will be Rs 2.5 per kg, and for rice it will be Rs 3.50 per kg. Last week, after the hike, BPL wheat was to have cost Rs 3.25 per kg, while rice was to have cost Rs 4.52.

The BPL population is to be spared from the hike of 60 paise per kg in sugar prices as well. The price hikes for the population above the poverty line (APL) will remain the same as the ones made last week. APL wheat will cost Rs 6.5 per kg, and rice will cost Rs 9.05.

It may be pointed out that, following today'sdecision, the subsidy on wheat to the BPL population will be Rs 5.57 per kg, and for rice the subsidy will be Rs 7.26 per kg.

Last week's sharp cut in subsidies on wheat, rice, and sugar would have resulted in an overall saving of Rs 1,900 crore -- of this around Rs 700 crore has been given back to the BPL population. The 30 per cent cut in LPG subsidy, amounting to Rs 700 crore, however, has remained untouched -- LPG is not used by the poor. The urea subsidy cut of Rs 800 crore has not been rolled back either, with the BJP's allies content with protecting the interests of that part of the population that lives below the poverty line. At the end of the excercise, the Government has achieved a net reduction of Rs 2,700 crore in its runaway subsidy bill.

When the Congress was in power, it will be recalled, Finance Minister Manmohan Singh had announced a sharp 40 per cent hike in fertiliser prices -- following a huge outcry, he rolled this back by 10 per cent, but still achieved his objective of affecting asignificant cut in the burgeoning fertiliser subsidy.

Today's decision on the partial roll-back was announced by Defence Minister George Fernandes after a meeting of the coordination committee of BJP and its allies. The decision was conveyed by Prime minister Atal Bihari Vajpayee to the coalition partners during a four-hour meeting of the coordination committee of the BJP and its allies, most of whom decried the move while some had threatened to review support. Fernandes told reporters that Vajpayee announced the decision after members of the panel `collectively' asked him to decide on the issue of price increase keeping in mind the view of allies.

Today's meeting was mainly called on a request from Finance Minister Yashwant Sinha to interact with leaders of allies to know their views on the `kind of things' they would like to go into the budget.