The Cabinet Committee on Economic Affairs (CCEA) on Thursday decided to decontrol sugar with certain riders.
Union Food Minister KV Thomas said the government will do away with release mechanism and the levy sugar system. This will double the subsidy to Rs 5,300 crore, the minister said.
A panel, headed by the Prime Minister's Economic Advisory Council Chairman C. Rangarajan, had suggested withdrawal of curbs on the sugar sector, allowing millers to sell the produce in the open market and sharing of revenue with cane growers.
The panel appointed by Prime Minister Manmohan Singh, called for scrapping of levy sugar system under which it is mandatory for the sugar mills to sell 10 per cent of their output to the government for supply to the poor at subsidised rates.
"The levy quota system is leading to unnecessary losses to the sugar mills. Our recommendation to the government is that sugar for the public distribution system (PDS) should be bought from the open market," Rangarajan said. (With Agency Inputs)