Budget impact: Withdrawal of sugar subsidy to reduce offtake from states

Fall in consumption witnessed post-demonetisation continued in January as well, says ISMA

With the Centre deciding against providing subsidy to state governments on sugar in public distribution system (PDS), which was Rs 4,500 crore a year, this year the subsidy is expected to be confined to only Rs 200 crore — because of which lower offtake of sugar sales for PDS and ration shops is expected. 

Indian Sugar Mills Association (ISMA) said in a note that as a result of the subsidy withdrawal in the Union Budget presented on Wednesday, some states who maintain buffer for distribution through ration shops may not do so in future. This will reduce offtake of sugar.