Reconsider sugar decontrol: Jayalalithaa tells PM

Tamil Nadu Chief Minister J. Jayalalithaa Thursday urged Prime Minister Manmohan Singh to guarantee that the difference between the market price of sugar and its sale price through public distribution system (PDS) would be borne by the centre as a subsidy beyond 2014-15.

Alternatively, she asked the prime minister to reconsider the central government's decision to withdraw the levy sugar obligation on sugar mills and continue with the current system.

In a letter whose text was released to the media here, Jayalaltihaa stressed that doing away with the levy obligation on sugar mills would affect the poor.

She said: "I request you to reconsider the decision of withdrawing the levy sugar obligation on sugar mills and continue with the existing levy system of sugar in the interest of the public, or to guarantee that the entire difference between the open market price of sugar and issue price in the PDS would be borne as subsidy by the Government of India and continue the subsidy beyond 2014-2015 as well."

The central government recently decided to remove levy obligation on sugar mills (supply of sugar to government) and to decontrol the regulated release mechanism.

According to her, under the new dispensation, the central government will provide a subsidy of Rs.18.50 per kg only for the quantity committed under levy, but to be procured in the open market, with a rider to retain the retail price of Rs.13.50 per kg at Fair Price Shop levels.

"As per the communication received, this subsidy by the Government of India will be available only for the financial years 2013-2014 and 2014-2015. There is no clarity whether this arrangement will continue beyond 2014-2015," she said.

She said any price fluctuation over Rs.32 per kg in the open market will have to be borne by the State, which is already saddled with a huge subsidy burden.

"At present, levy sugar released to Tamil Nadu by the Government of India is only 10,835 MT per month which meets only one third of the total requirement for distribution under PDS," Jayalalithaa said.