CURBS ON SUGAR LIFTED, SUBSIDY LIKELY TO GO UP

NEW DELHI: The government has lifted key restrictions on how sugar is sold, dismantling one of the last vestiges of the ‘licenceraj’ era, long overdue and blamed for hurting cane farmers, millers and consumers alike.

Sugar is a globally controlled commodity but India, the world's second-largest producer, regulates it the most. The cabinet on Thursday abolished a rule that makes it mandatory for mills to sell 10% output to the government at below-market prices so that this could be supplied to the poor, termed ‘levy sugar’. The move will help avoid sharp swings in retail prices and stabilise production, according to a panel that recommended lifting of the curbs.

It is in step with a key recommendation of a committee set up by the Prime Minister and led by Chakravarthi Rangarajan, the PM’s economic advisory council chief.

Levy sugar sales often hurt millers' profitability, making them unable to pay farmers on time. The sugar industry owes nearly R5,490 crore in payment arrears to farmers, which often prompts cane growers to shift to other crops every two years or so. This leads to occasional shortfall in sugar output, pushing up consumer prices and a glut- deficit cycle.

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