At present, sugar is distributed at a subsided rate of Rs 13.5 per kg to 2.5 crore families under the Antyodaya Anna Yojana (AAY).
The proposal is to extend one kg sugar supplies to additional 16.29 crore beneficiary families, would cost Rs 4,727 crore to the exchequer, sources said.
The ministry is thinking of supplying 1 or 2 kg of additional foodgrains but a final call is yet to be taken, sources said.
Under the National Food Security Act (NFSA), the government is supplying 5 kg of foodgrains each per month to over 80 crore people at a highly subsidised price. Wheat is being supplied ar Rs 2 per kg, while rice at Rs 3 per kg.
The distribution of additional foodgrains through the PDS is being considered as state-run Food Corporation of India (FCI) is saddled with wheat and rice stock. With some foodgrains stock kept in open space, the FCI is under pressure to clear stock before monsoon season starts.
Southwest monsoon is expected to hit Kerala on June 5.
Already, the FCI has started offloading wheat stock to bulk consumers but traders are not keen to buy at such high rate at a time when the grain is easily available in the open market at a lower rate.
The government's buffer stock is overflowing because of bumper production as well as procurement of wheat and rice in the last few years.