Ration sugar will no longer be sweet in Tamil Nadu. Here's why

The decision comes after the Centre withdrew subsidy given to State Government and the recent rise in sugar prices.

Tamil Nadu Government is all set to increase the price of sugar sold through Public Distribution System (PDS). The decision comes after the Centre withdrew subsidy given to the state and the recent rise in sugar prices. 

Centre withdrew the subsidy on sugar in June 2017 and restricted the subsidised sugar for 1,864 MT to be supplied to 18.64 lakh Antyodaya Anna Yojana (AAY) cards.Because fo these changes, the subsidy reimbursement from Centre has come down from Rs 20 crore per month to Rs 3.45 crore, said Kumar Jayant, Principal Secretary of Tamil Nadu Government.

Tamil Nadu was claiming on an average a subsidy of Rs 20 crore per month from Centre. 

As the market price of sugar went to Rs 45 per kg, the cost over and above the subsidy of Rs 18.50 per kg provided by the Centre on the allotment of 10,833 MT was also taken by the State with an additional burden of Rs 14 crore per month.

Due to the withdrawal of levy sugar allotment and further reduction in the subsidised sugar allotment from 10,820 MT to 1,864 MT per month from June, subsidy burden to the State due to sugar alone has gone up to Rs 1,300 crore per annum for the monthly supply of 33,636 MT of sugar per month under PDS.

Tamil Nadu has decided to continue the supply of sugar at Rs 13.50 per kg only for AAY cards and to revise the selling price of sugar for other cards to Rs 25 per kg for the eligible quantity with effect from November 1.

Even after the revision, the difference between the market price of Rs 45 a kg, at which the State procure sugar and subsidised rate of Rs 25 per kg at which sugar will be supplied to all cards, other than AAY cards, will be Rs 20 per kg and the State will have to bear this subsidy.

The amount of subsidy on account of sugar alone to the state will be Rs 836.29 crore per annum.

Sugar off-take used to be around 21,000 MT per month in 2005-06 and it rose to 33,636 MT in 2016-17. 

Centre used to allot 10,833 MT of sugar per month under levy system up to May 2013. The state used to supply 37,163 MT of sugar per month on an average under PDS at Rs 13.50 per kg. The balance quantity over and above the levy allotment was procured by the state from cooperative sugar mills at an open market rate and the subsidy on the differential cost was borne by the State.