New Delhi: The government on Wednesday decided to restore the subsidy for states to ensure sale of 1 kg of sugar at a cheaper rate for 2.5 crore AAY families, the poorest of the poor, under the public distribution system (PDS).
A decision in this regard was taken at the meeting of the Cabinet Committee on Economic Affairs (CCEA) headed by Prime Minister Narendra Modi here today.
The sugar subsidy was discontinued with effect from March 2017. The Union food ministry as well as some states had been keen on its continuance for at least families covered under the Antyodaya Anna Yojana (AAY).
The CCEA, according to government sources, has approved a proposal to bring back the subsidy of Rs 18.50 per kg to state governments for selling 1 kg of sugar to AAY families via ration shops.
The subsidy burden on the Centre will be around Rs 550 crore for supplying about 3 lakh tonnes of the sweetener.
In the 2017 Budget, the government withdrew the sugar subsidy and earmarked only Rs 200 crore to clear past claims. For the last fiscal, Rs 4,500 crore were allocated for the scheme that covered BPL families too.
Under the scheme, states were buying sugar from the open market at wholesale rates and selling at a subsidised rate of Rs 13.50 per kg through PDS. The Centre was providing subsidy of Rs 18.50 per kg to states.