Govt mulls IMG to vet sugar decontrol report
Apart from linking cane prices to the byproduct rates where states have a role and cane are de-reservation, all other major recommendations, including on levy sugar and release order mechanism, can be implemented by the Centre, industry executives said.
At present, mills are mandated to sell 10% of their output to the government for the PDS, known as levy sugar, at cheaper rates that cover just around 70% of their cost of production. The government also fixes the quarterly quota of sugar that mills are required to sell in the open market, aimed at discouraging hoarding and keeping supplies steady. Moreover, while the Centre fixes the minimum benchmark price of sugarcane, some states notify much higher prices of the commodity, which, mills complain, bleed their balance sheets when sugar price remains subdued.
The food ministry has already sought responses from key cane-producing states regarding the Rangarajan panel report, submitted last month. If implemented, the scrapping of levy burden alone would leave an additional Rs 3,000 crore a year with the cash-starved sector, but it will also raise the Centre’s food subsidy burden accordingly.
Efforts at lifting government control twice in the 1970s met fierce political resistance, mainly on concerns that domestic sugar prices would shoot up, and the issue was dropped. The benefits of liberalisation have also not
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