Feb 27, 2013 05:41 PM IST | Source: CNBC-TV18

Sugar decontrol yet to be approved by Cabinet: Thomas

The center‘s move to decontrol sugar which was likely to be implemented before the budget has got delayed as it still needs to be approved by the Cabinet.

The center's move to decontrol sugar which was likely to be implemented before the Budget has got delayed as it still needs to be approved by the Cabinet, KV Thomas, Union Food Minister told CNBC TV18.

The government has however already started working on two key recommendations by the C Rangarajan committee-regulated release mechanism and levy sugar obligation.  

Thomas said that the government will most likely introduce the Food Security Bill in the last week of ongoing Budget session.

Below is the verbatim transcript of the interview

Q: You spoke at an event a few weeks back and said that decision on partial sugar decontrol could happen in the next 15 days. Were you hinting that it may happen in the Budget itself?

A: See this is under discussion for a long time and now it is under circulation so that it has to be approved by the cabinet. What we have worked out are the recommendations of the Rangarajan committee of which one is the levy sugar. The Rangarajan Committee's recommendation is that we should get out of the levy sugar system but at the same time the valuable tip sugar to the states under the PDS system should be protected. Second is the release mechanism, we have got a mechanism by which every month sugar is being released but from that it has gone to once in three months, now once in six months and now it is almost once in a year. So, second suggestion is also more or less in the process of implementation. All other recommendations, we have to discuss with the state government and we are discussing. The last one was the jute bag and that is also in discussion with the ministry of textiles.

Q: There is a concern with regards to that levy quota though in the sense if it is done away with, the government may have to bear an excess burden between Rs 5,000 to Rs 6,000 crore on its balance sheet, something the finance ministry may not be in favour of?

A: No. There is nothing on the government to bear. We will find out some kind of mechanisms by which government will not have an additional subsidy. Because already it is subsidised when we are giving it to the states at the rate of Rs 13.50 per kg, and fair and remunerative price (FRP) of Rs 19.50 per kg. The liability on the government is about Rs 23 per kg. We subsidise them from Rs 23, they collect Rs 13.5 then the remaining we subsidise to the states, which is to the tune of about Rs 2,000 crore now. Suppose the FRP further goes up then again the subsidy component to the states will increase, but in the proposed system we will find out a mechanism like either increase in excise duty or export import duty mechanism.

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