Sugar decontrol adds Rs4,995 crore to centre's subsidy bill

The government would need to spend approximately Rs4,995 crore for providing subsidy on about 2.7 million tonnes of sugar needed for distribution of sugar through fair price shops in the targeted public distribution system, minister of consumer affairs, food and public distribution K V Thomas informed the Lok Sabha today.

The central government is providing subsidy for distribution of sugar through fair price shops in the targeted public distribution system (TPDS) at a uniform retail issue price (RIP) throughout the country, he informed the House in a written reply.

He said the government has considered the recommendations of the C Rangarajan Committee on de-regulation of sugar sector and has, inter-alia, decided to do away with levy obligation on sugar mills. However, to make sugar available in the TPDS at the existing RIP of Rs13.50 per kg, the government would reimburse the subsidy at the rate of Rs18.50 per kg. This would be limited to the quantity based on the states/UTs existing allocations, he added.

Considering that the PDS sugar quota of states and union territories total about 27 lakh tonnes, the total subsidy would amount to approximately Rs4,995 crore, the minister said.

Alternatively, Thomas said, under the new dispensation, state governments and union territory administrations would procure sugar in a transparent manner from the open market and claim subsidy from the central government for the quantity distributed in the TPDS. The guidelines for claiming subsidy are being framed and would be issued shortly, he said.