The Cabinet Committee on Economic Affairs (CCEA) on Wednesday approved a proposal to give flexibility to states to fix the retail price of sugar distributed under the public distribution system. The move marks a change from the decision taken by the CCEA in 2013 when the Centre partially deregulated the sector by allowing mills freedom from supplying subsidised sugar for state-run welfare programmes — also known as levy sugar — among others, as suggested by the Rangarajan panel in 2012. The Centre had then said it would offer states a subsidy of R18.50 per kg if they sell the PDS sugar at R13.50 per kg to the intended beneficiaries. It had also decided that states would float tenders to buy sugar for the public distribution system and it would offer subsidy on purchases subject to the maximum price of R32 a kg. States have to fork out from their own coffer the additional subsidy if the purchase price of sugar for the PDS exceeds R32 a kg. However, of late, some states — especially Gujarat and Kerala — had conveyed to the Centre that since the cost of sourcing sugar from producers located in far-away regions had been soaring, it was difficult for them to stick to the PDS sale price if the centre didn’t increase its subsidy limit, said a source. Hence they wanted flexibility to change the issue prices, which has now been acceded by the Centre. The food ministry had sought the CCEA approval to keep the sugar subsidy for state purchases at R18.50 per kg for this marketing year through September 2015. It had suggested that states would have to bear the burden had they wish to lower the issue price of PDS sugar. The country requires around 2.8 million tonne of sugar a year for state-run welfare programmes. With political considerations weighing on sugarcane pricing and mills forced to supply levy sugar, the sector had seen its fortunes wane, the centre had decided to unshackle the sector from some controls in 2013.