The finance ministry is considering a proposal to do away with the public distribution system and start issuing food coupons to beneficiaries who can then buy food items from the open market, the Economic Times reported on Wednesday.

Aiming to target subsidies better through a less obtrusive mechanism, the ministry is holding internal discussions on a phased withdrawal of the price control mechanism for food items. It will present its views before a committee set up two weeks ago to look into the restructuring of the public distribution system, the report said.

The proposal is likely to find a mention in the upcoming budget, the report quoted a government official as saying.

The idea of food coupons was mooted in the economic survey for 2008-09. “It may be useful to introduce food stamps/coupons which may be valid outside the PDS outlets once the markets get better integrated. Food coupons will allow the consumers a wider choice,” the survey said.

A road map which will suggest the states in which the proposal will be implemented on a pilot basis is also expected soon.

The PDS provides rationed amounts of food items and other essential commodities at below market prices to more than 10 crore ration card holders through fair price shops (FPS). According to a Planning Commission study released in 2008 only about 42% of subsidized grains issued by the central pool reach the target group.