Faced with the prospect of a surge in sugar prices during the Lok Sabha polls, the government on Tuesday decided to make available 5.4 million tonne of sugar for the April-June quarter, as against 5.2 million tonne available during the same period last quarter.
Higher sugar availability will ensure that prices remain stable during the summer when demand from bulk buyers like soft drink makers increase, a senior government official said. He added apart from releasing higher quota, the government has also extended the date till when mills can liquidate their March monthly quota.
The industry had complained that the allocation could not be disposed off due to imposition of stock limit orders.
In India , the government fixes the quantum of sugar that each mill can sell every month.
The official statement said sugar availability for April will be 1.95 million tonne, while the availability for June will be 1.85 million tonne. The availability for June will, however, be lower at 1.6 million tonne.
The allocation has been raised despite estimates of lower production in the current season ending September 2009. As per the industry estimate, sugar production is likely to decline to 15 million tonne against 26.4 million tonne in 2007-08 season.
Out of the total allocation of 5.4 million tonne, 4.7 million tonne will be normal non-levy (free sale) quota, while 600,000 tonne will be available from dismantled buffer stock and 100,000 tonne as carry-over stock from the previous year.
Besides free sale sugar quota, the Centre allocated 191,000 tonne of levy sugar (meant for ration shops) for April, which will take the availability to 2.14 million tonne for the month, compared to 1.88 million tonne in the year-ago period.
The government expects 100,000 tonne of unsold sugar from March quota to be carried forward in April.
The unsold non-levy sugar in a month is generally converted into levy sugar unless the government extends the period for execution of sale.
The government will be monitoring the sugar prices in the open market closely and shall not hesitate to release additional non-levy sugar if sugar prices show sharp increase, the statement said.
In order to bail-out the sugar industry, the Centre had created buffer stock of 5 million tonne in two tranches of 2 million tonne and 3 million tonne in 2006-07 season.
The entire 2 million tonne from the first buffer stock and 7,50,000 tonne from the second buffer stock were required to be sold by September last year. The remaining quantity from the second buffer stock will be sold during the current season.
The government also highlighted that the stock holding and turn over limits on recognised dealers of sugar have come into effect from March 27.