In order to boost availability of sugar during the festival season and to prevent hoarding, the government has asked sugar mills to convert all unsold stock out of the dismantled first and second buffer stock and normal monthly quota into ?levy sugar?, or sugar sold through the public distribution system. The unsold stock would be converted into levy sugar if not sold in open market by September 30.
The government has also threatened to take penal action against the defaulting mills under the Essential Commodities Act, 1955. Earlier, the government, by a order in July, dismantled the sugar buffer stock of 20 lakh tonne that it had asked mills to create in 2007 and allowed them to sell the dismantled buffer stock in the domestic market at any point of time during the 2007-08 sugar season that ends in October. The stocks are to be sold without the requirement of release orders from the directorate of sugar. Later, the government also allowed dismantling of the second lot of 30 lakh tonne sugar of buffer stock and allowed mills to sell 25% of the stock in August and September, while the remaining 75% at any point of time during the 2008-09 sugar season.
Sugar mills were required to submit monthly returns by July 31 for the 20-lakh tonne of buffer stocks sold in the open market and subsequent returns were to be filed by the 10th of each month for the remaining stocks sold. Though the government tried to dismantle buffer stocks and check prices , mills resisted dismanting stocks or filing returns.