Cabinet may discuss partial sugar decontrol this week

Differences persist between various ministers on implications of abolishing the levy sugar mechanism

The union cabinet is expected to discuss the much-awaited measure to abolish the levy sugar mechanism as part of the government’s proposed move to partially unshackle the Rs 80,000 crore Indian sugar sector from its control.

According to a senior official though no final confirmation has come till late Tuesday, but the issue could be taken up in the meeting of the union cabinet this week as a note has already been sent to the secretariat.  

He said if differences persist between various ministers on the implications of abolishing the levy sugar mechanism, the matter could be referred to a select panel of ministers.

Meanwhile, officials said the differences had cropped up because the food ministry has favoured dismantling of the levy sugar mechanism, under which mills have to necessarily sell 10% of their annual production to the government at cheap rates which then re-sells the same sugar through ration shops at still lower prices.

However, the department of finance has expressed the fear of sharp rise in subsidy burden if the system is dismantled as then government would have to share the entire burden of distributing cheap sugar through ration.

At present, this burden is shared between Centre and mills. Officials said the food ministry as favoured increasing the excise duty on sugar to offset the losses due to increased subsidy.

It has also suggested that government should either constitute a high-powered committee of ministers or let an inter-ministerial group of secretaries discuss a proposal to regulate the export and import duty on sugar also to offset the increased subsidy. Abolishing the regulated release order mechanism could also be considered by the union cabinet.