Officials said the Centre would have to bear an additional subsidy burden of Rs 4,161 crore (Rs 41.61 billion) this financial year, if this proposal was implemented.
Though it would add to the burden on the already strained government finances, the proposed move would create additional space for foodgrains.
The additional subsidy burden will happen because at present additional grain is allocated to states for APL families at Rs 11.85 a kg for rice and Rs 8.45 a kg for wheat, which are higher than the price issued by the central government.
However, if the grains are allocated at the central issue price, the price for rice would come down to Rs 8.30 a kg and that for wheat to Rs 6.10 a kg.
Officials said a proposal to this effect was being considered following requests from states.
An empowered group of ministers which met recently had approved the allocation of an additional five million tonnes (mt) of grains to APL families under PDS.
It also considered extending the validity period for additional grains allocated from the central pool in January 2011.
validity period that expired in March is likely to be extended to September.
States have lifted just 17 per cent of ad hoc APL grains allocation due to higher prices compared to the central issue price.
This not only negates the purpose of allocating additional grains, but also creates huge storage problems.
Officials said states were also not lifting the entire additional allocation of grains given by the Centre for BPL families.
A special allocation of five mt grains was made in January for BPL families for six months ended June, but just around 54 per cent was lifted by the states.
"States are not only lifting special allocation of foodgrains for APL families, but also for BPL families," a key official said.
However, for APL families, the situation was more acute, the official said. The food ministry has urged states to lift more grains allocated to them from the central pool under special allocations as the storage situation is precarious.
According to the food ministry's estimate as on June 1, the country had a food stock of 65 mt, while the total storage space available with the Food Corporation of India and state agencies is estimated at 63 mt.