With regard to the sugar subsidy post the decision of decontrol, Finance Minister P Chidambaram said the government will bear an additional annual subsidy of Rs 2,600 crore on account of decontrolling the sugar sector only for two years. The government supplies about 17-20 lakh tonnes annually through ration shops at subsidized price.
By adding further, Chidambaram said ‘states are now free to procure sugar through competitive bidding or otherwise sugar mills at a price or inclusive price not exceeding Rs 32 per kg. The states have to make their own arrangements, but for a period of two years, the government will bear the difference as a subsidy’. Currently, the sugar subsidy is around Rs 2,600 crore. Post decontrol, it would go up to Rs 5,300 crore.
Earlier this week, the Cabinet Committee on Economic Affairs (CCEA) had partially decontrolled the sugar sector by giving freedom to millers to sell in the open market and removing their obligation to supply the sweetener at subsidized rates to ration shops. The decision on sugar sector decontrol was overdue and has been taken after nearly about 20-21 years.
India, the world's second biggest sugar producer after Brazil, is expected to produce 24.5 million tonnes of sugar in 2012-13 marketing year (October-September) from 26.3 million tonnes in the previous year. While, the country annual domestic demand is pegged at 22 million tonnes.
