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After the deregulation of sugar and removal of levy mechanism, the food ministry and states are now struggling with the new problem of delay in lifting up of remaining stock of levy sugar for the year 2011-12.
This is important as previous balances of sugar allotted to states have to be cleared before the new liberalised regime of sugar sales can start without any levy obligation.
According to officials close to the development, around 30,000-40,000 tonnes of sugar is yet to be lifted from the sugar mills out of the total levy sugar allocated to the states for the year 2011-12. The problem is mostly seen in the state of Maharastra where many sugar mills have been allotted levy obligation to sell sugar to other states.
To this effect, around 15- 20 show cause notices have also been sent to the sugar mills to readily sell sugar to the states allotted. Official sources said if the mills do not sell sugar even after the show cause, then sugar will be confiscated and sold to the states to fulfil the 2011-12 levy obligation.
In many cases even lifting agencies for the states are at fault said officials.
They explained that every year there is a backlog in the sale of levy sugar but the remaining balance gets rolled over when the new allocation is done for states and levy obligation is decided for the mills.
However that is not the situation this year. From this year onwards there are no levy obligation and mills are free to sell the sugar at market determined prices to all including states.
Therefore, many mills are reluctant to sell the sugar at levy price which is way below the market price. Levy price is a mechanism in which mills are under statutory obligation to sell sugar at subsidised price. While the levy price of sugar is Rs 13.50 per kg, the market price is way above in the range of Rs 30-32 per kg.
They explained earlier there was not much difference between the market price and levy sugar meant for public distribution system but since last few years the difference has been rising consistently, officials said.
Since the states were reimbursed earlier to the extent of Rs 13.50 per kg and market price was around this price, sugar was available aplenty for PDS and there used to be a shortage in the open market. Now the situation has reversed.
Prior to deregulation, the lifting of sugar under PDS from mills has already started coming down sharply to the extent of the 60-70% of the stock as against 90-95% earlier, said officials. States of Bihar and Chattishgarh have virtually stopped lifting sugar from the mills for PDS.
As against bills for reimbursement to the states for sugar under PDS to the extent of around Rs 5,000 crores earlier, now the centre receives of Rs 1000-1500 crores as many states are lifting less sugar under PDS. This is because, sources said, the subsidy is given to the states against receipts of distribution of sugar under PDS at levy price of Rs 13.50 per kg only.
