Govt may discuss sugar decontrol tomorrow

If levy mechanism is abolished, excise may be raised to make up for subsidy rise; Cabinet also likely to take up food Bill

The Union Cabinet is likely to pave the way for a partial decontrol of the Rs 80,000-crore sugar sector. It is expected to discuss on Monday the much-awaited measure to abolish the levy-sugar mechanism, under which private millers are required to sell a specified amount of the sweetener to the government at concessional rates. However, additional excise might have to be imposed on sugar to offset the increased subsidy burden, if the move takes place.

The Cabinet could also take up the proposal to abolish the regulated release-order mechanism and give mills the freedom to sell any quantity of sugar in the open market, said people in the know. At present, the government decides on the quantum of sugar each mill could sell in the market every quarter or every month.

The officials added, also likely to be discussed at the Cabinet meeting was the food security Bill, which incorporates the amendments to the previous Bill, as suggested by the standing committee of Parliament on food.

The food ministry had suggested the levy-sugar mechanism, which mandates mills to sell 10 per cent of their annual produce to the government at cheap rates for sale through ration shops at even lower prices, be abolished.

The finance ministry had expressed the fear of a sharp rise in subsidy burden if the system was dismantled, as the government would have to share the entire burden of distributing cheap sugar through ration shops. At present, this burden is shared by the Centre and mills.

In response, officials said, the food ministry had suggested the excise duty on sugar could be raised to offset the increased subsidy burden. Also, a high-powered committee of ministers could be constituted or an inter-ministerial group of secretaries could discuss the proposal to regulate the export and import duties on sugar.

“Though no amount has been suggested, there could be an increase of Rs 42 per quintal in excise duty,” an official said. The current excise duty on sugar stands at Rs 98 a quintal, including cess.

Officials, however, added that the possibility of the proposal going to a group of ministers, if differences persisted, could not be ruled out.
ON PLATE: BITTER-SWEET PROPOSALS

SUGAR PRICE DECONTROL
Rs 2,500-3,000 cr: Additional subsidy burden if the levy-sugar mechanism is abolished
Offsetting the loss: Excise duty on sugar output could be raised
Quantum of rise: Cabinet would take a call on the rise in duty
Expert take: The proposals are part of the recommendations of the C Rangarajan committee

FOOD BILL
Proposal: The revised version of the food Bill seeks to abolish distinction between BPL and APL families
Parity: A category with uniform entitlements has been proposed
Proposed entitlement: 5 kg wheat/ rice/ cereal per person per month
Price: Proposed to be Rs 2 per kg for wheat, Rs 3 a kg for rice and Rs 1 a kg for coarse cereals