A panel headed by Prime Minister’s Economic Advisory Council Chairman C. Rangarajan has recommended scrapping the mandatory norm of buying 10 per cent of sugar mills’ output for supplies to the poor.
The committee, set up by Prime Minister Manmohan Singh in January this year, also advocated mills to share 70 per cent of their revenue with about 50 million cane growers while disfavouring any ban on exports and imports.
“The levy quota is leading to unnecessary losses to the millers. Our advice to the government is that buy sugar from open market for PDS,” Rangarajan said.
The committee also suggests doing away with levy sugar obligation for mills.
Levy quota is the quantity of sugar that millers have to mandatorily sell to the government for distribution through PDS. However, the mills are allowed to sell non-levy sugar in the open market, but the quantity each mill can sell is fixed by the government.
The panel has recommended fair and remunerative price (FRP) decided by the central government be given to sugarcane farmers at the time of purchase and also doing away with the system of state-advised price (SAP) fixed by state governments.
In the present system, the states decide an SAP which usually is higher than the FRP.
Shares of Sugar companies like Bajaj Hindusthan, Balrampur Chini, Dhampur Sugar and Shree Renuka gained between 2 per cent and 4 per cent following the proposals.