The government has restored the sugar subsidy provided to 2.5 crore Antyodaya Anna Yojana (AAY) families belonging to the poorest of the poor category. Following the implementation of the National Food Security Act across 36 states and Union Territories, the category of Below Poverty Line (BPL) families has been done away with and replaced by more number of people referred to as ‘priority’ category. Last fiscal, finance minister Arun Jaitley had scrapped the allocation of annual sugar subsidy of Rs 4,500 crore provided to BPL families from FY18.
“We have decided to give 1 kg sugar to AAY families through the Public Distribution System (PDS). The Cabinet Committee on Economic Affairs took the decision recently,” food and consumer affairs minister Ram Vilas Paswan said on Monday. “As there is no definition of BPL families in the food security legislation, the states have not informed us about the subsidised sugar being given through the PDS system, thus leading to a possible diversion of subsidy,” a food ministry official told FE.
As per the directive of the food ministry, the Centre will restore a subsidy of Rs 18.50 per kg to state governments for selling 1 kg of sugar to AAY families through PDS outlets. The annual subsidy burden on the Centre for supplying about 3 lakh tonnes of sugar would be around Rs 550 crore. In the current fiscal, Jaitley has allocated only around Rs 200 crore to clear past claims. Till the end of last fiscal, the sugar subsidy for BPL families was provided to around 40 crore beneficiaries in 30 states and Union Territories.
About 2.7 million tonnes of sugar per annum were distributed through PDS outlets till the end of 2016-17 where the food ministry provided Rs 18.50 per kg subsidy for purchase of sugar by the states for sale at subsidised rates through PDS. The rest of Rs 13.50 per kg sugar sold through PDS was paid by the beneficiaries while the sugar was sourced from the open market by states. Earlier, the food ministry had urged the finance ministry to provide sugar subsidy to AAY families as the category has been defined in the NFSA.
The food ministry had informed the states that the Central government has decided to withdraw subsidy on sugar from the current fiscal and they would have to bear the entire cost of sugar for selling at a cheaper rate via ration shops. Sources said states protested against the decision to discontinue the sugar subsidy. However, many state food department officials acknowledged that following the roll-out of NFSA last year, sugar subsidy can’t continue as it would entail a far greater number of people to be provided with subsided sugar which is financially crippling.