Government asks sugar mills to sell 20 per cent of output to PDS

The central government on Monday notified its decision to double the amount of sugar purchased from millers for distribution through ration shops in the 2009-10 season to protect the poor against high sweetener prices which have threatened to touch Rs 40 a kg due to a slump in output.

Significantly, mills are not required to sell proceeds from duty-free imported raw or white sugar to the government for supply under the public distribution system (PDS).

Last month, the empowered group of ministers (eGoM) on food had decided to double the quota of levy sugar meant for supply through ration shops of mills to 20 per cent of their total output from October 1.

Also importers of sugar who import duty-free raw sugar for processing into white and refined sugar or import duty-free refined sugar shall not be required to sell levy sugar to the government in respect of such white or refined sugar processed from imported raw sugar or such imported white or refined sugar.

However, the Centre has not yet announced any change in the price of sugar it buys from millers for supply under the public distribution system. Cardholders get sugar through ration shops at Rs 13.50 per kg.

Earlier, the Centre had decided to pay more for sugar it buys from millers from an average of Rs 1,322 a quintal. However, no notification as such has been announced. Sugar price in any case would not be raised for ration card holders as of now. Sugar prices almost doubled in a year on uncertainties over output which slumped to 15 million tonnes in the 2008-09 season from about 26.4 million tonnes a year earlier, significantly denting the country’s reserves.

Prices are still ruling high at about Rs 35 a kg on scepticism over adequate supply this season as well due to less area under the sugarcane crop. Sugar prices climbed on Monday on improvement in festive demand and as most sugar mills will begin crushing behind the schedule due to rains.

India needs about 23-23.5 million tonnes of sugar for annual domestic consumption.

Source:The Economic Times