Govt may allocate sugar quota on qtrly basis from Apr

With surplus domestic production, the government is likely to allocate quantities of sugar to be sold in the open market and ration shops on quarterly basis from next month instead of current practice of fixing quota every month.

Under the regulated release mechanism, the Centre fixes the quota of levy sugar (meant for distribution through public distribution system) and non-levy sugar (meant for sale in the open market) every month for each individual sugar mills in the country.

According to sources, the Food Ministry has agreed to industry's demand for quarterly allocation of sugar quota and a formal order would be issued soon.

The decision comes in view of estimates of surplus sugar production in the 2011-12 marketing year (October-September) and stable retail prices of the sweetener, they added.

Sugar production is estimated to touch 25.2 million tonne in this marketing year against the annual demand of 22 million tonne, prompting the government to allow three million tonne of exports.

Industry bodies Indian Sugar Mills Association (ISMA) and National Federation of Cooperative Sugar Factories (NFCSF) have been demanding decontrol of the sector, which includes doing away with monthly release mechanism and levy obligation for PDS.

Under the levy obligation, sugar mills are required to sell 10% of their output to the government at below- cost rates for supply to ration shops. Mills supply levy sugar at 60% of the cost of production, resulting in an annual industry loss of about Rs 2,500-3,000 crore.

In January, Prime Minister Manmohan Singh had constituted an expert committee, headed by PMEAC Chairman C Rangarajan, to examine issues related to decontrolling the sugar sector.

The members of the committee include Kaushik Basu, Chief Economic Adviser, Ministry of Finance, and secretaries to the Department of Food and Agriculture.

Other members are: Commission for Agricultural Costs and Prices (CACP) Chairman Ashok Gulati, former Agriculture Secretary Nand Kumar and KP Krishnan, Secretary EAC.