Our Bureau

New Delhi, Jan. 6

IN a bid to arrest spiralling domestic sugar prices, the Government on Thursday announced an additional free sale quota (FSQ) of four lakh tonnes (lt) for the current January-March quarter. This is over and above the 34-lt of sugar that has already been `released' to mills for offloading in the open market during the quarter.

The additional 4 lt FSQ included 2 lt released for January and 1 lt each for February and March. Besides, two other major moves were announced by the Union Minister of Consumer Affairs, Food and Public Distribution, Mr Sharad Pawar, following his meeting with the Prime Minister, Dr Manmohan Singh.

These include a decision to automatically convert any unsold FSQ of mills into levy quota for the public distribution system (PDS) and extending the period of fulfilment of export obligation for raw sugar imports against advance licences from 24 months to 36 months. "If a mill does not offload the FSQ released to it at the end of the month, the unsold quantity would automatically be converted as levy quota. This, along with the enhanced FSQ for the current quarter, will enhance domestic availability," Mr Pawar told presspersons here.

The Minister said that the decision to permit mills to fulfil their export obligation within 36 months of undertaking duty-free import of raw sugar against advance licences against the existing stipulation of 24 months would also help augment domestic availability of sugar. During the current season, 11 lt of raw sugar have so far been contracted or come into the country. Besides, another 6 lt are in the process of being contracted.

"The decisions taken today will lead to lower sugar prices. If the situation fails to improve, the Government will not hesitate to even allow import of white sugar at a lower duty than the present 60 per cent," Mr Pawar declared. According to him, sugar prices should ideally be within Rs 20 per kg at the retail level.

The Minister ascribed the price spiral over the last month to unnecessary speculation by a section of the trade. "I have been reading reports that we had not made sufficient releases for the current quarter and that is the reason for prices shooting up. There is no basis for this perception," he said.

Inclusive of the 6.50-lt levy quota, the total domestic availability of sugar for January-March 2005 works out to 40.50 lt, which is above the 39.94 lt during January-March 2004, 30.59 lt during January-March 2003 and 33.52 lt during Janaury-March 2002, he pointed out.

On the overall domestic availability situation, Mr Pawar said that the current 2004-05 season (October-September) had opened with carry-over stocks of 85 lt. "With expected production of about 120 lt, there will be enough sugar available to meet the domestic consumption requirement of 180 lt," he added.

(This article was published in the Business Line print edition dated January 7, 2005)
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