The Centre's new sugar regime wherein states have to procure and distribute sugar on their own, has alarmed most states - including the Congress-ruled ones - who sought more time and money to adjust to it.
The new 'de-controlled' regime is set to start from June 1. But at a food ministry review meeting last week, even bigger states such as Uttar Pradesh, Gujarat, Maharashtra maintained that time is too short to adopt the new policy. The Centre has offered to give a subsidy of Rs 18.50 per kg of sugar for public distribution system (PDS) supply. But the states have put forward the argument that this amount too is insufficient.
The seven northeastern states, Andaman & Nicobar and Lakshadweep made it clear that given their special situations, a transition time of at least one year would be required.
The food ministry is now mulling the option of giving more subsidies to these states and Jammu & Kashmir to offset the actual expenses. This option is being explored even as the UPA government is desperately trying to cut subsidies on several other fronts.
The Centre has also offered to release the subsidy money in advance to all the states.
The Congress-led Assam government had, in fact, wanted to retain the Food Corporation of India (FCI)'s service and proposed that FCI should undertake all operations and the Centre should pass the subsidy amount directly to the food agency.
But the Centre is adamant about ending the "dependency culture" to give an incentive to states to develop their own food distribution machinery. Before implementing the sugar de-control policy, the Centre used to sell 2.7 million tonnes sugar annually to the states for PDS.
But in April, the Cabinet approved a key reform policy on sugar. Under this, sugar mills will not be required to hand over 10% of their product to the government and they will also be able to sell unlimited amount in open market.