Agriculture Minister Sharad Pawar on Monday said his ministry has favoured the food ministry's Cabinet proposal to increase excise duty on sugar, to offset the financial burden on the Centre if it decides to buy the sweetener from the open market for ration shops.
At present, the excise duty on sugar is about 70 paise per kg. The Centre requires 27 lakh tonnes of sugar annually for public distribution system (PDS).
"Food Ministry has moved a Cabinet proposal on removal of levy sugar and continue supply of subsided sugar in PDS. Currently, government buys sugar at Rs 17 per kg from millers and sells it at Rs 13.50 per kg in PDS. Once levy system is removed, the government has to buy it at open market price. To reduce financial burden and continue supply of subsidies sugar, the Food Ministry has proposed increase in excise duty... We have supported the proposal," Pawar told reporters on the sidelines of a function.
In October 2012, the expert panel headed by Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan had recommended immediate removal of two major controls - regulated release mechanism and levy sugar obligation.
Under the levy sugar system, mills are required to sell 10 per cent of their output to the Centre at cheaper rates to run ration shops, costing Rs 3,000 crore to industry annually.
The Rangarajan panel had also suggested doing away with the regulated release mechanism under which the Centre fixes the sugar quota that can be sold in the open market.
Asked about the possibility of any farm loan waiver proposal in the Budget, Pawar said: "I have read about it in newspaper. I don't know. If Finance Ministry is doing something, I don't know. There is no discussion either inter-department nor at cabinet level on this issue".
On some states opposing Food bill, he said the Centre should address it as full co-operation of all the state governments is required to implement the food law.
"One has to see what Parliamentary panel has recommended. Definitely, we have to go in detail. If we have to implement the food bill, we need full cooperation of all states. If states have serious objection, it is our duty to address them," the minister said.