Just a day after the Cabinet deferred a decision to decontrol the sugar sector, Food and Agriculture Minister Sharad Pawar today said the time is ripe to abolish the levy system.
"This is the proper year because we have got the good stocks of about 110 lakh tons as carry-over and we expect good production. So this is the proper time when there is ample stock of sugar, one should take that decision," Pawar said on the sidelines of a seminar here.
He said the food ministry has submitted a proposal to the cabinet that money should be provided to states for purchasing sugar from the open market instead of continuing with the levy.
"Whatever the gap between the levy and open market prices, up to Rs 4-5 per kg will be provided by the Centre to the states where they can make available sugar in the public distribution system," Pawar said.
At present, sugar producers are mandated to give 10 per cent of their open market sale quota to the government at lower than the market price, which is known as levy sugar.
The government fixes quota for each mill on a monthly basis to sell sugar in the open market.
Science and Technology Minister Kapil Sibal had yesterday said the issue of sugar decontrol has been "deferred".
The sugar industry expects production to decline to 200 lakh tonnes in 2008-09 season starting October, compared to an estimated 265 lakh tonnes in the current season ending September. In 2006-07 season, India produced a record 283 lakh tonnes while the annual demand is 200 lakh tonnes.
The comfortable stock position also had a sobering impact on the retail prices, which range between Rs 17 and Rs 20 a kg. But rates have started increasing in the last few weeks to Rs 19-22 a kg.