New Delhi: The government has assured consumers that adequate sugar stocks are available across the country and that all necessary steps will be taken to maintain continuous supplies at reasonable prices, particularly ahead of the upcoming festive season.
The assurance comes after a sharp increase in sugar prices in recent weeks. However, the latest government assessment indicates that the situation has begun to improve, with ex-mill sugar prices declining by around 20% in recent days and retail prices also beginning to move downward.
Government says there is no shortage
The government has said that a nationwide physical verification of sugar stocks at mills has confirmed comfortable availability of sugar.
In several cases, mills were found to be holding stocks higher than the quantities declared in their monthly returns. Officials said the verification established that there is no shortage of sugar, and there is no justification for panic buying or excessive stocking.
The government has also identified cases where mills were allegedly selling less sugar than their allocated quota, a practice that could restrict supplies in the market despite sufficient physical stocks.
Prices had risen sharply
Sugar prices had increased considerably during July and August. Government data showed that the average retail price had risen from around ₹48.18 per kg on July 20 to ₹55.70 per kg on August 20.
The government attributed the price increase to several factors, including lower-than-expected domestic production, higher demand ahead of the festive season, weather-related crop damage, tighter global supplies and speculation and hoarding by some market participants.
The government has also rejected claims that the recent increase was primarily caused by diversion of sugar for ethanol production. According to its assessment, the proportion of sugar diverted for ethanol has actually declined in recent years.
Fortnightly quota system from September
To improve the movement of sugar from mills to the market, the government will introduce a fortnightly sugar allocation system from September, replacing the existing monthly quota arrangement.
Under the new system, mills will be required to sell at least 40% of their allocated quantity in the first week and the remaining quantity in the following week. The government says this will allow it to monitor demand and supply more closely and release additional quota whenever necessary.
Sugar must reach the market within seven days
Mills have also been directed to ensure that sugar sold by them is dispatched within seven days of sale.
The government believes faster movement through the supply chain will reduce unnecessary stock accumulation and discourage speculative holding. Bulk consumers have also been advised not to maintain stocks beyond their operational requirements.
New sugar season expected to boost supply
The next sugarcane crushing season is scheduled to begin from October 15.
According to the latest government assessment, operational mills in Karnataka and Maharashtra are expected to add around 2 lakh tonnes of sugar in September. More than 10 lakh tonnes is expected to be produced in October and around 45 lakh tonnes in November, substantially strengthening domestic availability during the festive period.
Duty-free imports also allowed
Earlier this month, the government permitted duty-free imports of 10 lakh tonnes of raw sugar as a precautionary measure to strengthen domestic availability.
The measure was announced after sugar prices rose sharply and ahead of the period when domestic demand traditionally increases because of festivals.
Government monitoring prices and stocks
The government has been monitoring sugar stocks, prices and market movements through stock declarations and physical verification.
A stock-holding limit of 400 tonnes for sugar dealers has been in force from August 1 and will remain applicable until November 30. From September 1, bulk consumers will also be restricted from holding stocks exceeding 15 days of consumption.
Prices expected to remain under watch
The government says the recent fall in ex-mill prices and the beginning of a decline in retail prices indicate that market conditions are improving.
Industry representatives have also said that panic and speculative buying, rather than an actual shortage, played a significant role in the recent price spike and that sufficient stocks remain available to meet festive-season demand.
The government has reiterated that it will continue monitoring the market and take further steps whenever required to ensure that consumers receive sugar at adequate quantities and reasonable prices.
