The Government has notified the Cabinet Committee on Economic Affairs (CCEA) decision to remove two key controls on the sugar sector, says media reports.
Earlier On April 4, CCEA decided to decontrol the sugar sector by giving freedom to mills to sell sugar in the open market and removing their obligation to supply the sweetener at subsidised rates for ration shops.
The Cabinet Committee on Economic Affairs has given a much-needed boost to India’s Rs 80,000 crore sugar industry. Sugar prices will now be market-linked but state controls like distance between sugar mills, sugarcane area reservation and setting of cane prices (over and above the government’s fair & remunerative price will continue to remain.
CCEA accepted the recommendations made by the Rangarajan Committee on sugar reforms at its meet held on Thursday. The meeting was presided by Prime Minister Manmohan Singh.
The timing of the sugar decontrol is bold considering the coalition government lacks the requisite numbers in Parliament and is facing general elections next year. Coalition partner DMK had in March withdrew support to the United Progressive Alliance.
In the past, sugar mills had to sell 10% of their total production -- below market prices -- to the government under the levy quota mechanism. This has been done away with.
The Cabinet has also done away with the release mechanism. Under the regulated release mechanism, the Centre had the power to fix the amount of sugar mill owners could release in the open market.