New Delhi: Congress party president and United Progressive Alliance chairperson Sonia Gandhi has spiked the government’s plans to increase the price of sugar distributed to the poor through the public distribution system (PDS).
A meeting of the Congress core committee headed by Gandhi asked the government to put off the decision as its “timing” was bad. “This is despite Prime Minister Manmohan Singh having argued in favour of it in the meeting and pointing out that the government has to cut the subsidies to reduce the fiscal deficit,” said a person familiar with the development on condition of anonymity.
The move revives concerns about whether the Congress party, which heads the coalition, has the appetite to undertake unpopular measures required to restore fiscal balance, having already come under attack for such moves over the past two weeks.
Food minister K.V. Thomas, who was not in favour of increasing the sugar price, was not present at Monday’s cabinet meeting. The item had earlier been on the agenda of the cabinet meeting.
The initial proposal was to increase the price of sugar sold through PDS by Rs.10; the price of the subsidized sweetener hasn’t been raised since 2001-02. The government wanted to increase the price by at least Rs.3-4, said the same person.
Currently, poor families get 500-1,300g of sugar per person per month from ration shops at Rs.13.50/kg.
The subsidy on sugar for the current fiscal year is estimated at Rs.2,302.58 crore; it was Rs.1,832.08 crore last year. The food subsidy is estimated at Rs.75,000 crore this year.
The government’s move was seen as a part of its attempts to cut its food subsidy bill and ensure the deficit doesn’t exceed the estimated 5.1% of gross domestic product (GDP) in 2012-13.
A panel headed by C. Rangarajan, chairman of the Prime Minister’s economic advisory council, appointed earlier this year to look into all issues related to the sugar industry had previously suggested that sugar be distributed at Rs.25, the price the government pays mill owners.
The UPA government, earlier this month, increased the price of diesel by Rs.5 per litre, capped the supply of subsidized cooking gas cylinders to six per household per year and allowed foreign direct investment in multi-brand retail, inviting vehement criticism from the opposition as well as some allies.
It led to the acrimonious exit of the Trinamool Congress from the coalition, adding to the political pressure on the government, which has been struggling to cope with allegations of corruption.
Jai Mrug, Mumbai-based political analyst said that the move by Gandhi is essentially a “symbolic accommodation of the NAC driven programme”. Gandhi heads the NAC, or the National Advisory Council, which sets the social agenda for the government.
“The Congress would like to give a symbolic indication that it would go with the NAC driven flagship programmes of the government. It is however, keeping its options open to change the course at a suitable time which may also be soon after the Gujarat elections,” he said.
“As for the party, in the past month, the Congress has taken steps that would suddenly change the trajectory, reclaim their space and portray themselves as a party in control,” he added.
Anuja contributed to this story.