Sugar Price Hike Puts Rs 19cr Burden On Maharashtra

The Maharashtra government will have to bear an additional burden of Rs 19 crore as subsidy in the current financial year to absorb yesterdays hike by the Central government in the price of rationed sugar to keep its commitment of supplying the commodity at a fixed price of Rs 9.05 per kg.

According to food and civil supplies department sources, sugar will continue to be available to ration card holders in the state at the June 1995 price of Rs 9.05 per kg despite the Centres second hike in a year in the price by 90 paise from current Rs 10.50 to Rs 11.40.

The decision to maintain the old price was in accordance with the Shiv Sena-Bharatiya Janata Party governments commitment in June 1995 to supply five essential commodities wheat, rice, sugar, dal and palmolein oil through public distribution system (PDS) at fixed prices for five years, sources said.

The Centre, which releases the sugar quota for PDS, had raised rationed sugar price by Rs 1.45 in February this year and again pushed the price up by 90 paise yesterday to cover up the burgeoning subsidy burden of about Rs 600 crore, far exceeding the budgetary provision of Rs 500 crore for 1997-98.

Since the first hike in February, the state government has been incurring burden to the tune of Rs 4.86 crore a month in the form of subsidy to maintain the June 1995 price level, and it will further go up by Rs 3 crore to Rs 7.9 crore per month to honour its commitment from next month.

The state government had made a provision of Rs 200 crore in this years budget to supply five commodities, including sugar, through ration shops at June 1995 prices.

The sources said an additional provision of Rs 19 crore for the rest of the financial year would have to be made during the winter session of the legislature to absorb the latest hike in sugar price.

With that provision, the government would be shouldering a total subsidy burden of Rs 85 crore - which includes Rs 66 crore to cover the first hike of February 1997 - only on account of rationed sugar, the sources added.