The sugar industry has appealed to the Finance Ministry to include cheap sale of sugar through the Public Distribution System (PDS) as part of the government's plan to directly transfer subsidies in cash to beneficiaries.
In a letter to Finance Minister P Chidambaram, the Indian Sugar Mills Association (ISMA) said that government should immediately abolish the levy sugar mechanism. Under the mechanism, sugar mills across the country are mandated to sell 10% of their annual production at a significantly discounted rate. The millers also met the Finance Minister last week.
The high-powered committee on the sugar sector appointed under the chairmanship of Prime Minister’s Economic Advisory Council (PMEAC) Chairman P Rangarajan had also recommended abolishing the levy sugar mechanism. The delegation of sugar millers met the Finance Minister last week. The government is planning to directly transfer 29 services in cash in 51 districts across the country from January 1, 2013.
The millers also said urged the government to end the regulated release order mechanism where the government determines the quantum of sugar that each mill can sell in the domestic market in a given time period.
“The regulated release mechanism should be abolished as market forces are the best mechanism to determine the price and demand and supply of the commodity. Monthly releases only bring structural disorder into the market and does not benefit the consumer either in the long run,” ISMA said.
The sugar industry representatives also apprised the Finance Minister that they are in full agreement with the recommendations of the Rangarajan committee. “Complete decontrol of the sugar sector would be beneficial to all stakeholders; government, industry, farmers and consumers,” the millers said.
The government on its part has initiated the process of studying the recommendations of the Rangarajan Committee. It is also planning to constitute a panel of ministers headed by Agriculture Minister Sharad Pawar to determine the implementation of the recommendations. Last month, it allowed mills a free-hand in determining the quantum of produce they want to sell in the next four months within a broad cap.
