Centre to take call on sugar decontrol before Budget

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Cabinet note to be moved soon after discussions with farm & defence ministries. Cabinet note to be moved soon after discussions with farm & defence ministries.
SummaryCabinet note to be moved soon after discussions with farm & defence ministries.

The Centre will take a decision on giving freedom to the Rs 80,000-crore sugar industry to sell the sweetener in the open market before Budget, food minister KV Thomas said today.

A Cabinet note on sugar decontrol will be moved shortly after discussions with senior ministers, particularly those for agriculture and defence, he added.

“The decision on decontrolling levy sugar and release mechanism system will definitely be taken before Budget,” Thomas told PTI.

The sugar sector is highly regulated. Through the release mechanism, the Centre fixes the sugar quota that can be sold in the open market. Under the levy system, it asks mills to contribute 10% of output to run ration shops costing the industry Rs 3,000 crore a year.

In October last year, the expert panel, headed by PMEAC chairman C Rangarajan, had recommended immediate removal of two major controls: regulated release mechanism and levy sugar obligation.

“A CCEA note will be moved after consulting senior ministers, especially the agriculture and defence ministers in the next two days. We need to discuss how we can manage if levy sugar obligation is removed,” Thomas said.

“We need to take a cautious approach on levy sugar because it has financial implications and the government has obligation to sell at subsidised rates through PDS,” he added.

Currently, the Centre buys sugar from mills at about R20 per kg and sells to ration card holders at R13.50 per kg.

On removal of quota allocation for sugar sale in the open market, Thomas said: “We have taken a liberal view and have moved to four-monthly mechanism. There is no problem in removing this system.”

The removal of the release mechanism would help mills manage inventories and cash-flows better, while abolition of levy sugar system would result in savings of R3,000 crore annually that it currently incurs on selling cheaper sugar to the Centre for running PDS.

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