Jayalalithaa protests against partial decontrol of sugar sector

Says move will create uncertainty in ensuring adequate supply of sugar through PDS

Tamil Nadu Chief Minister J Jayalalithaa today strongly protested against the central government's decision to remove the levy obligations on sugar mills and decontrol the regulated release mechanism for sugar.

In a letter to Prime Minister Manmohan Singh, Jayalalithaa said that the arrangement wold only create uncertainty in ensuring adequate supply of sugar through the Public Distribution System (PDS) at affordable cost to the poor, as the State will have to procure the entire stock from the open market. She added that any price fluctuation over Rs 32 per kilogram (kg) in the open market will have to be borne by the State, which is already saddled with a huge subsidy burden.

"At the outset, I would like to register my strong protest against this decision taken by the Government of India as it will adversely impact the supply of sugar through the PDS and hence the welfare of the poor and downtrodden in the long run," she said.

Under the new dispensation, the Government of India would provide a subsidy of Rs 18.50 per kg only for the quantity committed under levy, but to be procured in the open market, with a rider to retain the retail price of Rs 13.50 per kg at Fair Price Shop levels. As per the communication received, this subsidy by the Government of India will be available only for the financial years 2013-2014 and 2014-2015.

"There is no clarity whether this arrangement will continue beyond 2014-2015. The sudden withdrawal of levy obligation on Sugar Mills will expose the supply of PDS sugar to the vagaries of the market and the resultant volatility," she argues.

Currently, levy sugar released to Tamil Nadu by the centre is 10,835 MT per month which meets only one third of the total requirement for distribution under PDS. The State Government is already incurring heavy expenditure towards providing subsidy for the supply of sugar through the PDS.

Alleging that the present decision of the Ministry of Food and Public Distribution to remove the levy obligation on sugar would have a severe impact on the welfare of the poor and downtrodden who depend fully on the PDS for sugar, she requested the Prmie Minister to reconsider the decision and continue with the existing levy system of sugar, or to guarantee that the entire difference between the open market price of sugar and issue price in the PDS would be borne as subsidy by the centre.

The centre should also continue the subsidy beyond 2014-2015, she demanded.