The Central Government has considered the recommendations of Dr. C. Rangarajan Committee and has inter-alia, decided to do away with levy obligation on sugar mills for sugar produced after September, 2012 and dispense with the regulated release mechanism on open market sale of sugar. This information was given by the Minister of Consumer Affairs, Food and Public Distribution, Prof. K.V. Thomas in a written reply in Rajya Sabha today.
The Minister further said with the abolition of levy obligation on sugar mills the State Governments/UT Administrations would be required to procure sugar from the open market and the Central Government would provide fixed subsidy of Rs. 18.50 per kg to States/UTs for maintaining the current retail issue price of Rs.13.50 per kg. Considering that the States /UTs quota is about 27 lac tons, the total subsidy burden on Central Government would be approximately Rs. 4995 crores. Since the States /UTs would procure sugar at open market price instead of fixed levy price, the sugar mills would stand benefited to that extent. Further, due to dispensing with the regulated release mechanism, the sugar mills would make savings on account of reduced inventories resulting in reduced interest burden on working capital and the storage cost. These benefits/savings would enable the sugar mills to pay the cane price to farmers in time, he added.