Sugar decontrol decision in 15 days: Thomas

Says Food Ministry is seeking views of various ministries on the panel's recommendations

Food Minister K V Thomas today exuded confidence that the Forward Contracts (Regulation) Act Amendment Bill, seeking to give more power to the commodity markets regulator, was likely to be passed in the coming Budget session of Parliament.

He also said the government was likely to take a decision on partial deregulation of the sugar sector in the next 15 days.  

"I believe the Bill will be passed in the coming session," he said while addressing an Assocham event on the commodity futures market.

The minister also said the government was working on a proposal to allow private traders in additional wheat export, as part of the effort to create space for the new crop. So far in the financial year, the government has allowed export of 4.5 million tonnes from the central pool stocks, mainly by state-run trading corporations.    

Sources said the food ministry has circulated a cabinet note for inter-ministerial discussions on allowing export of an additional five mt.

The FCRA Amendment Bill, 2010, aims to develop the commodities futures market by arming the Forward Markets Commission (FMC) with financial autonomy and facilitating the entry of institutional investors, among other things.

On reports that the government was mulling a commodities transaction tax (CTT), the Minister said: "When the issue of CTT came before us in October last year, we immediately discussed it with stakeholders and an independent view has been passed on to the finance ministry." Thomas had recently written to the finance minister saying that any move to impose a CTT would affect the nascent market, sources said.

On sugar decontrol, Thomas said: "Our sugar position is comfortable this year. The Rangarajan committee's recommendations are before the department. I believe in the next 15 days, we will be able to take a decision on the entire (lot of) issues like levy sugar, release mechanism and others."

In October last year, a  panel of experts headed by C Rangarajan, chairman of the Prime Minister’s Economic Advisory Committee, had recommended immediate removal of two major controls — the regulated release mechanism and the levy sugar obligation-- and to away with other restrictions gradually. The minister said the recommendations would not be like those of earlier panels on the subject, which had been shelved.      

He said the food ministry was seeking the views of various ministries on the recommendations and a cabinet note would be moved soon. According to sources, about 10 states have given their views on the panel's suggestions. However, the two major producing states of Uttar Pradesh and Maharashtra have yet to respond.      

At present, the sugar sector is controlled at all stages. Through the release mechanism, the Centre fixes what can be sold in the open market.

Under the levy system, it tells mills to contribute a specified proportion of output (10 per cent at present) to run ration shops, at a price it fixes, costing the industry Rs 3,000 crore a year.