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The Centre has asked state governments to immediately start buying sugar from the open market to ensure supply to ration card holders as it is left with the stock to meet PDS requirement for current month only.
The Centre has partially decontrolled the sugar sector and mills are no longer obligated to supply sweetener to the Centre for the Public Distribution System (PDS).
In a letter to state chief ministers, Food Minister K V Thomas said that the centre has allocated sugar quota up to May 2013 and "it is imperative that the states take immediate action for procurement for future requirements."
He also asked states to "initiate steps immediately to ensure that the supply of sugar through PDS is not affected during the period of transition and thereafter."
On April 4, the Centre decided to scrap the levy sugar mechanism, under which mills were obligated to supply 10 per cent of their production at a cheaper rate to the Centre to run ration shops.
Now, the state governments are required to procure sugar from the open market through a transparent system. The Government of India will bear the difference between the ex-mill price of Rs 32 per kg and retail sugar price of PDS at Rs 13.50 per kg.
"The Centre has decided to provide a subsidy at the rate of Rs 18.50 per kg to states for existing level of allocations so that sugar continues to be available to consumer under PDS at Rs 13.50 per kg," Thomas said in the letter.
The government supplies about 17-20 lakh tonnes annually through PDS at subsidised price bearing a subsidy of about Rs 2,600 crore annually, which may rise to Rs 5,300 crore in the decontrol period.
Besides, Thomas has also asked state governments to consider the Rangarajan Committee's other recommendations relating to cane area reservation, minimum distance criteria and adoption of cane price formula -- for implementation in a manner which is most appropriate.
Sugar production in the country is estimated at 24.5 million tonnes in the 2012-13 marketing year (October- September), as against the annual demand of 22 million tonnes.
