New sugar distribution mechanism may be delayed in some states

The government would soon review the preparedness of states to implement a new mechanism for distribution of sugar through ration shops and might consider either delaying its implementation or granting some exemption from the new system to a few states, a senior food ministry official said today.

He said the meeting had been called in view of concerns expressed by some states on their readiness to implement the new system for distributing sugar through ration shops.

According to the new system, the government will reimburse a fixed amount at the rate of Rs 18.50 a quintal of sugar to states for distributing the sweetener through ration shops, instead of directly allocating sugar to them. However, it might lead to ration shops going dry from June 1 in many states as the Centre has sugar stocks only till May 31, while many states have not yet accepted the mechanism.

The states will have to purchase sugar from the open market for distribution through the ration shops through an open tender and sell it at the existing fixed rate of Rs 13.50 a kg. The difference between the purchase price and sale price will be reimbursed by the Centre to the state but only to the extent of a uniform Rs 18.50 a kg.

The mechanism was approved by the Union Cabinet a few months earlier, in line with the recommendations of a Committee headed by the Prime Minister's Economic Advisory Council Chairman C Rangarajan.

Food Bill
The government today reviewed the preparations for implementing the ambitious Food Security Bill. The Bill, which is awaiting approval from Parliament, seeks to provide legal entitlement for cheap grains to almost 67 per cent of the Indian population.

Officials said all possible options to expedite the implementation of the Bill was discussed in a high-level meeting chaired by Finance Minister P Chidambaram. "A section in the government was of the view that the Food Security Bill should be implemented either through ordinance or by the usual practice of getting it cleared by Parliament, but the food ministry is of the opinion that the best possible solution could be getting Parliament's nod for the same," a senior official who was present in the meeting said. Food Minister K V Thomas and Parliamentary Affairs Minister Kamal Nath were part of the deliberations.

The draft National Food Security Bill promises 5 kilograms of wheat or rice or coarse cereals to every identified person per month at Rs 3 per kg for rice, Rs 2 for wheat and Rs 1 for coarse cereals.