The much-awaited decontrol of the sugar industry could see the light of day on Friday, with the Cabinet likely to consider the proposal at its meeting. According to official sources the Cabinet is expected to take up a proposal, forwarded by the food ministry, to partially decontrol India?s sugar industry, which is worth more than Rs 40,000 crore.
As per the decontrol proposal, the government plans to suitably amend the sugar control order-1966, to do away with a requirement which stipulates that mills have to deliver 10% of sugar produced by a unit as ?levy? for public distribution system (PDS). Instead, it plans to direct states to purchase sugar from the open market for distribution under PDS under the decontrol proposal.
The decontrol proposals also include abolishing the release order mechanism of sugar or making it either quarterly, half yearly or yearly, as part of its proposed move to de-regulate the sugar industry.
At present, government decides the quantum of sugar that each mill can sell in the open market every month. Among other proposals being put forward by the food ministry for de-controlling the sugar industry, is abolishing that part of the control order that stipulates the distance between two sugar mills.
?There are some more issues for decontrol like the fixing the statutory minimum price and the state administered price, but it is unlikely that these two portions will be considered given the political implications of such a move,? the sources added.
On the need for deregulating the sugar industry at a time when the production in the next crop year that starts in October, is projected to fall short by around 5.0 million to 6.0 million tonne, a senior government official said that the proposed move to decontrol the industry will not push up prices despite projections of low production.
?The move to decontrol the sugar industry has nothing to do with the forecast of fall in production, instead it is needed for growth of the industry and is also meant to save the food ministry from numerous litigations by millers,? the official added. The country?s sugar production is likely to be around 26.5 million tonne during the 2007-8 crushing season.