The Cabinet Committee on Economic Affairs (CCEA) is expected to discuss a proposal on sugar decontrol on April 02, a decision on which has been pending for long. With this move, the government is planning to partially release the Rs 80,000 crore Indian sugar sector from its control. Under the present levy sugar system, mills are required to sell 10 percent of their output to the government at cheaper rates to run ration shops, costing Rs 3,000 crore to the industry annually.
Sugar industry is the only sector which is controlled by the government right from the production through marketing of sugarcane and sugar. If the proposal gets accepted, then the government would have to buy sugar from the open market and continue to sell at a subsidized price through ration shops. India, the world's second biggest sugar producer, is expected to produce 24.5 million tonnes of sugar in 2012-13 marketing year (October-September).
Earlier in October 2012, the expert panel headed by PMEAC Chairman C Rangarajan had recommended immediate removal of two major controls - regulated release mechanism (fixing sugarcane price) and levy sugar obligation. It also suggested giving freedom to mills to sell sugar in the open market and having a stable export and import policy.
However, the finance ministry has expressed the concerns over the sharp rise in subsidy burden if the system is dismantled as then government would have to share the entire burden of distributing cheap sugar through ration. Presently, this burden is shared between Centre and mills.
