The Cabinet Committee on Economic Affairs will take up the issue of sugar decontrol during its meeting on Thursday, according to Union Minister of State for Food and Consumer Affairs K.V. Thomas.
“The issue is before the Cabinet Committee on Economic affairs. We hope it will be approved in Thursday’s meeting,” Thomas said, addressing a group of journalists from The Hindu and Business Line .
The C. Rangarajan committee, which went into the issue of decontrol, had come up with eight important recommendations and the Food Ministry had identified three of them as important.
One of the key recommendations was to find a mechanism to allow States buy the sugar needed for the public distribution system and then give them the compensation for subsidising the consumer.
“The States burden can be reduced through compensation either by release money from the Sugar Development Fund or increasing excise duty,” he said. The second issue was on mechanism through which release of sugar in the open market was controlled by the Centre.
“We have decided to discontinue the release mechanism. But if prices go up in the open market and supply through the public distribution system is affected, we will intervene,” Thomas said.
The third recommendation was doing away with the mandatory jute packaging and the Government has decided to go by the Rangarajan panel’s suggestions.
To a question on the Finance Ministry’s reservation to remove curbs in the sugar sector, the Minister said that his Ministry had cleared the misgivings and it would have no problem in clearing the decontrol proposal.
Thomas said that the Government wanted to strengthen the farm sector by making them adopting modernisation.
“At the same time, we want supply of sugar to continue through the public distribution system,” he said.
C. Rangarajan, Chairman of the Prime Minister’s Economic Advisory Committee, was also studying the issues relating to the procurement of foodgrains by the Food Corporation of India.
“Last year, we procured 82 million tonnes of foodgrains. The problem is that we have to pay taxes imposed by States for the procurement and then are forced to sell to the private trade at a subsidised price. The Rangarajan panel is going into issue and hopefully will come out with a solution,” he said.
Thomas said foodgrains wastage has been brought down to 0.03 per cent of the production from 2.5 per cent and the Food Corporation of India was being asked to follow a policy of first getting out grains that had come into warehouses first.
Asked about government-to-government export deals on wheat, the minister said there were problems in getting the deals done.
First, Iran and then Egypt held talks with the government to buy wheat.
“This year, Indian wheat has been accepted globally and we have exported huge quantities. We have the capacity to export more than the current five lakh tonnes a month but we lack infrastructure,” Thomas said.
On constructing silos to store foodgrains for a longer period of time, he said most of the projects were only on paper and a few would take off in the next 3-4 months.