Govt scraps PDS sugar subsidy from next fiscal

The Centre will not provide Rs 18.50 per kg subsidy on sugar to states for selling it via ration shops from next fiscal and has allocated only Rs 200 crore in the Budget for clearing past claims.
In the Union Budget 2017-18 presented to Parliament today, the government has allocated Rs 200 crore to clear pending claims under the PDS sugar subsidy scheme, while the budget allocation is Rs 4,500 crore for this financial year.
As per the existing scheme, states purchase sugar to be supplied through the public distribution system (PDS), popularly known as ration shops, from the open market at wholesale rates and sell at a subsidised rate of Rs 13.50 per kg. The centre gives subsidy of Rs 18.50 per kg to states.

The subsidised PDS sugar is given to 40 crore beneficiaries of BPL (below poverty line) families. About 2.7 million tonnes of sugar per annum are required for PDS sale.
The sugar subsidy is discontinued in view of all states rolling out the Food Law, under which there is no distinction of categories of beneficiaries as BPL.
Sources had earlier said that the Food Ministry had already sounded out states that the central government may withdraw subsidy on sugar from next fiscal and they would have to bear the entire cost of sugar for selling at a cheaper rate via ration shops.

Food minister Ram Vilas Paswan had also written to Finance Minister Arun Jaitley demanding not to discontinue the scheme entirely and proposed continuance of it for at least Antyodaya Anna Yojana (AAY) families, the poorest of the poor segment.
In the Budget, the government has allocated Rs 496 crore under the Sugar Development Fund for next fiscal to provide assistance in the form of interest to sugar mills towards working capital loans of Rs 6,337.17 crore already provided to them for clearance of cane price arrears.
The government has projected sugar cess collection of Rs 3,000 crore for the next fiscal.