In a major decision, the Centre on Thursday unshackled the Rs. 80,000-crore sugar industry by abolishing the monthly release mechanism and doing away with the mills’ obligation to supply levy sugar for subsidised distribution under the Public Distribution System, thus allowing market forces to come into play.

The decision, in line with the suggestions of a panel headed by C. Rangarajan, Chairman of the Prime Minister’s Economic Advisory Council, was cleared by the Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Manmohan Singh. Claiming that the decision to decontrol the industry would not impact sugar prices, Minister of State for Food K.V. Thomas told journalists that there was enough sugar in the country. The production last year was 26.5 million tonnes. This year, more than 24.5 million tonnes is expected as against a requirement of 22.2 million tonnes. “There was a huge burden on the government to see that farmers and consumers’ interests are protected and we have managed to balance that,” he said. The Centre will continue to provide sugar to the poor under the PDS at the current issue price of Rs. 13.50 per kg. For this, the States will be free to purchase sugar through a transparent system at the current ex-factory price of Rs. 32 per kg which has been capped for two years. The difference between the purchase price and the issue price will be borne by the government.