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Govt clears partial sugar decontrol New Delhi, April 4 A decision, the riches of which may be passed on to sugarcane producers and consumers, will help the industry save about Rs 3,000 crore a year. The decision to partially decontrol sugar sector, the only industry left under the government control, was taken at a meeting of the Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Manmohan Singh. Although the government maintained the decision would not lead to any rise in retail prices of sugar, it would double the government’s subsidy burden to Rs 5,300 crore annually from about Rs 2,600 crore now. Briefing the media after the CCEA meeting, Food Minister KV Thomas said, “The regulated release mechanism may be dispensed with immediately. The obligation of levy on sugar mills be done away with for sugar produced after September 2012.” On a specific question, whether the prices of sugar would rise or not, Information and Broadcasting Minister Manish Tiwari, who was present at the briefing, replied, “Cheene hamesha meethi thi…meethi rahegi (sugar was always sweet and will remain sweet).” Under the regulated release mechanism, the Centre fixes the sugar quota that can be sold in the open market by sugar mills. Of late, the mechanism has been relaxed and the quota is now being released on half-yearly basis rather than on monthly basis. In the levy sugar system, millers are required to contribute 10 per cent of their output to the Centre for running ration shops at cheaper rate, costing the industry around Rs 3,000 crore a year. In its report, the Rangarajan Committee had said, “Levy amounts to a cross-subsidy between the open market and PDS sugar and is not in the interest of the general consumer or the development of the sugar sector. Therefore, levy sugar may be dispensed with.” Indian Sugar Mills Association (ISMA) director General Abinash Verma said, “As suggested by the Rangarajan Committee, these decisions will help the industry to achieve its potential growth of 20-25 per cent per annum. These much awaited reforms will reduce the cost of production and improve liquidity with millers which, in turn, will ensure better and timely payment of cane price to farmers, besides assuring better quality sugar at reasonable rates to the consumers on sustained basis.”The Centre would bear the difference between the ex-mill price of Rs 32 per kg and the retail price of PDS at Rs 13.50 per kg when procured by the state government. The government will continue to fix fair and remunerative prices of sugarcane. The minimum distance criterion between two mills will also continue, among other controls. Verma said, “These two important reforms will go a long way in improving efficiency, both at the farm and mill level, and make Indian sugar competitive in the international market.” NOT SO SWEET
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