Govt mulls cuts in sugar mills' contribution towards PDS

Anticipating better production in 2010-11 sugar year starting next month, the government may cut the quantity of sugar that mills have to contribute for supply through ration shops to 12 per cent of country's total output from the current 20 per cent.

"We are seriously considering to cut the levy sugar obligation on mills from the current level to 12 per cent in anticipation of higher production in 2010-11 season," a senior Food Ministry official told PTI.

The revised levy obligation would be effective from the new season starting October 1, the official said. The sugar year runs from October to September.

The government had raised the percentage of levy sugar to 20 per cent in 2009-10 in the wake of lower production.

Sugar production of India, the world's second largest producer, is expected to be more than 23 million tonnes in the 2010-11 against 18.8 million tonnes in the previous year, Food and Agriculture Minister Sharad Pawar had said last week.

The government requires 2.7 million tonnes of sugar for supply through ration shops. At projected production for the next year, the levy percentage of 12 per cent would be enough to meet the requirement of public distribution system (PDS).

At present, the government is buying levy sugar from mills at an average rate of Rs 17.06 a kg and selling the same at Rs 13.50 per kg to poor through ration shops.

Sugar industry body ISMA have been demanding cut in levy sugar as this would result in more quantity for sale in the open market.