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The union cabinet is expected to discuss the much-awaited measure to abolish the levy sugar mechanism as part of the government’s proposed move to partially unshackle the Rs 80,000 crore Indian sugar sector from its control in a meeting scheduled for tomorrow.
The issue was to discussed last month, but had to be postponed because the Cabinet Committee on Economic Affairs (CEA) did not meet, it was also listed for Tuesday, but had to be postponed as Finance Minister was out of town.
Another proposal to abolish the regulated release order mechanism to allow mills freedom to fix the quantum of sugar be sold in the market each month could also be discussed in the meeting.
The proposal to abolish the levy sugar mechanism and regulated release of sugar took some time to be placed before the cabinet because of some objections from the ministry of finance.
The food ministry has favoured dismantling of the levy sugar mechanism, under which mills have to necessarily sell 10% of their annual production to the government at cheap rates which then re-sells the same sugar through ration shops at still lower prices.
However, the department of finance has expressed the fear of sharp rise in subsidy burden if the system is dismantled as then government would have to share the entire burden of distributing cheap sugar through ration. At presently, this burden is shared between Centre and mills.
