No rise likely in PDS sugar price

The Centre’s decision to allow the State governments to determine the retail price of sugar supplied through the Public Distribution System (PDS) may not lead to any price hike in Tamil Nadu, at least for the time being.

Sugar is being sold at fair price shops at Rs. 13.5 a kg, the rate fixed by the Central government in March 2002. The Civil Supplies Corporation is getting it from the open market at a rate of Rs. 31 a kg or Rs. 32 to meet the monthly requirement of about 35,760 tonnes. The Central government provides a subsidy of Rs. 18.5 a kg only for 10,000 tonnes. For the remaining quantity of over 25,000 tonnes, the State government absorbs the entire cost, officials say, adding that the annual subsidy burden is around Rs. 685 crore.

Generally, 500 grams of sugar is provided per head a month with a ceiling of two kg a card a month. An additional three kg is given to those who have opted for sugar in lieu of rice. There are about 10.62 lakh sugar option cards, besides 1.86-crore rice-drawing cards.

There will be no change in the retail price as the State government is bearing the cost fully in respect of about two-thirds of the total required quantity and yet, providing the essential commodity at a rate of Rs. 13.5 a kg.

However, the Centre’s decision has also triggered doubts among certain sections of people whether the Union government will withdraw the sugar subsidy from the next financial year.

Tamil Nadu and other States were given to understand that the present scheme of sugar subsidy, when formulated in April 2013, would be in force for two years as the procurement price was capped at Rs. 32 a kg for the period. The subsidy scheme formed part of the Centre’s decontrol of the sugar industry when the system of levy sugar – the requirement of domestic sugar mills having to contribute 10 per cent of sugar production for the PDS - was abolished. It was then that the Centre agreed to meet the cost of difference between the retail price (Rs. 13.50 a kg) and the ex-mill price (Rs. 32) for the quantity allotted under the levy sugar system.

Reaction

Reacting to the development, E.V.K. S. Elangovan, Tamil Nadu Congress Committee president, contended that the Centre’s latest decision was made with the intention of abolishing the subsidy scheme. It was also made without consulting the State governments.