Indian sugar mills association

Now is not the time to raise sugar prices: Sonia to Thomas

Date:	26 Feb 2013

Source:	The Mint

Reporter:	Ragini Verma & Liz Mathew

News ID:	2023

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New Delhi: Congress president Sonia Gandhi has asked the government to ensure poor families will not have to pay more for buying sugar through fair-price shops even if mills are allowed to sell the sweetener at market rates, food minister K.V. Thomas said.

Thomas had said earlier the government would decide on freeing the Rs.80,000 crore sugar industry before the national budget is presented on 28 February. This was to help the government contain its food subsidy bill and ensure the fiscal deficit doesn’t exceed the estimated 5.1% of gross domestic product (GDP) in 2012-13.

Gandhi, also the chairperson of the Congress-led United Progressive Alliance (UPA) government, in a meeting with Thomas on Monday, emphasized that now was not the time to change the price or quantity of the sugar distributed to ration cardholders under the public distribution system (PDS).

The Congress party will contest for a third successive term in government in next year’s general election amid charges of corruption and poor handling of the economy.

With all sugar-producing states demanding that sugar prices be decontrolled, the government appointed a committee headed by C. Rangarajan, chairman of the Prime Minister’s economic advisory council, to look into the matter.

The panel recommended giving freedom to mills to sell sugar in the open market and removing the obligation on the mills to supply 10% of their sugar at a low rate to the government to meet demand at fair-price shops.

The panel, which held a series of discussions with mill owners and officials before preparing its final recommendations, also suggested that the price of subsidized sugar be increased to Rs.25.

Currently, poor families get 500-1,300g of sugar per person per month from ration shops at Rs.13.50/kg. The price of the subsidized sweetener hasn’t been raised since 2001-02.

“Whatever profit the sugar mills are getting is shared between farmers and the millers. So, Rangarajan committee has recommended that the levy could be removed,” Thomas said after his meeting with Gandhi. “We, however, want to make sure that it will not affect the PDS system. We will see to it that the PDS system continues with the same price and quantity of sugar.”

Instead, “there will be an increase in the subsidy for which we will find a mechanism—by way of some changes in the excise duty, import-export duty”, he said.

The government will decide on the issue shortly, he added.

The subsidy on sugar for this fiscal year is estimated at Rs.2,302.58 crore, up from Rs.1,832.08 crore last year. The food subsidy is estimated at Rs.75,000 crore this year.

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