Hyderabad, Nov. 2: The diversion of fine rice supplied through the Public Distribution System (PDS) has come under scrutiny in Telangana amid a sharp rise in retail prices. Millers and traders are allegedly involved in irregularities such as purchasing ration rice from beneficiaries, illegal stockpiling and selling rice at inflated prices.
The State government introduced fine rice distribution through the PDS in March 2025. At the time, experts and opposition parties had raised concerns that the subsidised rice could be diverted into the black market.
Those concerns have gained attention after 12 cases were registered against rice traders for alleged irregularities. The violations came to light during joint enforcement operations by the Civil Supplies, Police, GST and Legal Metrology departments.
PDS Fine Rice Diversion and Black Marketing Cases in Telangana
Officials have conducted extensive inspections in Hyderabad, Rangareddy and Medchal-Malkajgiri districts. The operations covered major wholesale trading centres, including Begum Bazaar, Nampally and Maharajgunj. Further raids are expected across the State to identify violations, prevent excessive pricing and provide relief to consumers.
Investigations revealed that fortified rice supplied through the PDS was allegedly being purchased from beneficiaries at around Rs.20 per kg and polished before being sold. Some traders reportedly mixed the rice with other varieties, packed it in branded bags and sold it at significantly higher prices.
Officials also found that some of these rice consignments were being transported to Maharashtra, Karnataka, Chhattisgarh and other States.
Telangana has around 1.06 lakh ration cardholders and approximately 3.42 crore beneficiaries. Each beneficiary receives six kg of rice every month. More than 2.05 lakh metric tonnes of rice is distributed across the State monthly, with the government spending nearly Rs.14,000 crore annually on the scheme.
The alleged diversion of ration rice and its resale at higher prices is undermining the purpose of the welfare programme.
Meanwhile, fine rice prices have increased considerably, with different varieties selling at Rs.80 to Rs.95 per kg in retail markets.
El Niño Concerns Add to Rice Price Pressure
Traders expect fine rice production to decline this season due to the possible impact of El Niño, raising concerns about further price increases. Some millers and traders are allegedly taking advantage of the demand through hoarding and other irregularities.
Recent raids in parts of Rangareddy district have resulted in the seizure of large quantities of ration fine rice from mills. Substantial stocks have also been seized in Karimnagar, Nalgonda, Miryalguda, Devarakonda and other areas.
The Civil Supplies Department said inspections were being conducted at wholesale shops, retail outlets and rice mills to prevent hoarding and black marketing. Officials are also holding meetings with traders to discuss the sharp rise in retail prices.
Civil Supplies Minister N. Uttam Kumar Reddy has warned rice traders against illegal stockpiling, black marketing and selling rice at exorbitant prices. He said the government would take stringent action against those found violating the rules.
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