Government may release sugar to tackle price spiral

New Delhi: The government is considering several measures to contain the speculation-driven rise in sugar prices. These include release of additional free sale sugar quota for the factories, conversion of unsold free sale sugar quota into levy sugar; and more incentives for the import of raw sugar.

If speculative tendencies are not curbed by such measures, the government may suggest to the National Commodity & Derivatives Exchange (NCDEX), which operates futures trading in sugar, to either further raise margins or ask for cash transactions, according to food ministry sources.

The final decision on these measures is likely to be taken tomorrow by food minister Sharad Pawar after consulting prime minister Manmohan Singh.

These measures will be enforced only if the price rise continues unabated. In case, the trend is reversed, such steps may not be necessary, food ministry officials pointed out. Yesterday, the wholesale prices in the Delhi market fell by about Rs25 a quintal in anticipation of a government crackdown.

The retail prices of sugar have risen in the past one year by nearly 28.8 per cent in Delhi, from Rs14.75 a kg on December 31, 2003, to over Rs19 a kg on December 31, 2004. The increase in the Chennai market has been even higher at 29.6 per cent, from Rs13.50 a kg to Rs17.50 during this period.