Close on the heels of the sharp increase in the price of diesel, the UPA government proposes to completely remove the subsidy on levy sugar sold to the poor through the Public Distribution System. This means a sharp increase in the price of sugar being sold to the Below the Poverty Line population. The Ministry of Food and Consumer Affairs has proposed that the price of the levy sugar be raised from Rs. 13.50 a kg to an average of about Rs. 24. This will not only deal a body blow to the poor who buy from ration shops but also set the benchmark for retail price at Rs. 24. The open market retail price of sugar has already gone through the roof, at Rs. 40.

The proposal, coming on the eve of the festival season, will be considered by the Cabinet Committee on Economic Affairs, chaired by Prime Minister Manmohan Singh, on Tuesday.

Informed sources said levy sugar prices had not been revised in the last 10 years and the subsidy pending on that count was about Rs. 5000 crore.

The government gives 500 grams of sugar per person at a subsidised rate of Rs. 13.50 per kg under the PDS.

It is mandatory for mills to provide 10 per cent of their production for subsidised sale through ration shops. This has been reduced from 20 per cent earlier. Millers, however, are pressing for total de-control of sugar.

They want the government free them from levy obligation and buy its requirement of rationed sugar from the open market and bear the cost of subsidy.

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