It is a hard blow that will not land softly. As the Manmohan Singh government braces for the June 5 fuel shock to reflect more fully in this Friday's inflation figures, even a good monsoon may not quite rescue it from the political quagmire of high food prices and rising interest rates. The emphatic arrival of the monsoon has seen a collective sigh of relief rising above South and North Blocks, but while a good kharif crop will banish the nightmare of shortages and costly imports, its impact on the price line might be more uncertain. If the monsoon does not falter, food silos will be full but prices could still be a worry. The conundrum that the government faces has been underlined by the upward movement of food prices last week. Even though the 8.75% inflation did not take into account fuel prices, the rise was due to the increase in diesel prices. No other factor had changed that could have affected the food prices dynamic in big and smaller cities and towns. Well-placed official sources pointed out that a good monsoon did indeed eliminate dire scenarios, but food prices were likely to remain "stable but high' and so will not really turn down the inflation fires. The reasons lie in the high minimum support price for paddy, up to Rs 850 from Rs 645 last year, and expectations that there will be a further increase by way of a bonus. A MSP of Rs 850 a quintal for paddy is seen to be quite generous but political demands for more as the cropping season nears are fairly inevitable. The view in government seems to be that the Commission for Agricultural Costs and Prices recommendation for a Rs 1,000 MSP was too steep and would only set the benchmark for next year at about Rs 1,200 a quintal. Yet competitive populism in an election-oriented year means that government is being forced to lose sight of MSP being a safety net and not a measure to match market rates. In this regard, the demands for higher MSP are only pushing retail prices upwards. A good monsoon could better production but will also result in rising subsidy payouts along with, paradoxically, higher retail rates. The efforts of top government figures from Prime Minister Manmohan Singh, finance minister P Chidambaram and Planning Commission deputy chairman Montek Singh Ahluwalia to assure the public that there will be post-monsoon decline in prices can be affected by both rising international oil prices as well as the huge skew in demand generated by massive subsidies. With cost of rice procurement around Rs 14 a kg and sale under PDS at Rs 8-8.50 a kg, the demand was bound to rise. What is worrying for government is while pro-poor aspects of PDS such as ensuring essential foodgrain to BPL families are hit by diversion of supplies, its subsidy burdens are shooting. Oil bonds account for Rs 70,000 crore, fuel increases and imports have pushed fertilisers beyond Rs 1,00,000 crore, food subsidy stands at around Rs 32,000 crore and the uncovered gap for petroleum products still remains around Rs 45,000 crore. Over and above all of this is the Rs 71,680 crore farm waiver that government has announced. It is felt that is all the increases in subsidies are really put on book, the fiscal deficit, pegged at 2.5% might actually be no less than 5%. In political terms what all this means is that while government's revenues are being gobbled up by huge payouts, it is not able to actually address infrastructure bottlenecks that are a reason for uneven growth