Costlier ration sugar likely on Cabinet menu

With the year’s major Hindu festivals coming to an end year, the Cabinet is again expected to consider a proposal to increase the price of sugar sold through ration shops, at a meeting slated for this week.

Those in the know said the current export scene in wheat and non-basmati rice and also a food department proposal to export another 1.5 million tonnes of wheat from the central pool over the already approved two mt could also come up for discussion.

A similar proposal to raise the retail price of sugar was deferred in September because of the absence of food and Consumer Affairs Minister K V Thomas. The proposal also did not find favour with a section of the ruling Congress party, reportedly unhappy over the timing, given that the festival season was approaching. Consumption of sugar goes up in the season.

In 2010, a suggestion to raise the retail price of sugar fell because of its impact on the poor. However, officials said this time, the finance ministry is keen on bringing about the proposal. Doing so would enable the government to bring down its annual food subsidy, expected to go beyond the estimated Rs 75,000 crore for 2012-13.

Officials said of the total food subsidy, the one on selling cheap sugar through ration shops would come down to nil if the retail price was raised to Rs 25.37 a kg from the current Rs 13.50 a kg.

For sugar sold at every rupee lower than this level for supply under the public distribution system, the government will have to incur a subsidy of Rs 270 crore a year, they said.