Sugar decontrol decision likely in 15 days: Food Minister

The Centre is likely to take a decision on giving freedom to the Rs 80,000 crore sugar industry to sell the sweetener in the open market in the next 15 days, Food Minister K V Thomas said on Friday.

In October last year, the expert panel headed by Prime Minister's Economic Advisory Council chairman C Rangarajan had recommended immediate removal of two major controls - regulated release mechanism and levy sugar obligation- and other restrictions gradually.

"Our sugar position is comfortable this year. The Rangarajan committee's recommendations are before the Department. I believe in the next 15 days, we will be able to take a decision on the entire issues like levy sugar, release mechanism and others," the Food Minister said at an Assocham event.

The Minister assured that the Rangarajan committee's recommendations will not see the plight of other panels' suggestions which have not yet been implemented. He also said the Food Ministry is seeking views of various ministries on the panel's recommendations and a Cabinet note will be moved shortly.

According to sources, about 10 states have given their views on the panel's suggestions on sugar decontrol. However, the two major sugar producing states - Uttar Pradesh and Maharashtra - have not yet responded.

At present, sugar sector is controlled right from production through distribution. Through the release mechanism, the Centre fixes the sugar quota that can be sold in the open market. Under the levy system, it asks mills to contribute 10 per cent of output to run ration shops costing the industry Rs 3,000 crore a year.

Currently, the Centre buys sugar from mills at about Rs 20 per kg and sells to ration card holders at Rs 13.50 per kg.

On removal of quota allocation for sugar sale in the open market, Thomas said: "We have moved to four-monthly mechanism. There is no problem in removing this system."

The removal of release mechanism would help mills manage inventories and cash-flows better, while abolition of levy sugar system would result in saving of Rs 3,000 crore annually that it currently incurs on selling cheaper sugar to the Centre for running PDS.

Barring two key regulations with respect to fixing sugarcane price and sharing of 70 per cent revenue by sugar firms with farmers, the Rangarajan report has suggested giving freedom to mills to sell sugar in the open market and having a stable export and import policy.