The centre has written to states asking the views of the state and union territories on dual pricing of sugar as in the wheat and rice, and/or on keeping the Above Poverty Line(APL) population out of the purview of Target Public Distribution System for sugar, as recommended by the B.B.Mahajan committee Report on Sugar industry submitted in April 1998. The letter also sought the views of states/ union territories on whether ALP population should be kept out of the TPDS for sugar, as the Mahajan Committee has said that a large percentage of subsidy on sugar was availed of by the non-poor (APL).

The suggestion to take Above Poverty Line population out of the TPDS system were fist made during the tenure of P.V Narashimha Rao in the first phase of economic restructuring and liberalisation.Later, the then Food Minister Devendra Prasad Yadav under Deve Gowda ,set up a 17 member Mahajan Committee in 1997 to study the sugar scenario, on a directive by the Allahabad High Court on a writ petition challenging the power of the state government to advise the sugar mills on the cane price payable to the growers.

In its report submitted on April 15 last year, the Mahajan Committee had recommended that sugar be taken off the TPDS but the centre had not accepted the suggestion although the recommendation for dual pricing found some favour with the union government.

At present mills are required to offload 40 percent of their sugar output as levy obligation to the government at an ex-factory levy price of Rs.10.22 per kg. The balance 60 percent freesale quota is allowed to be disposed of in the open market at a higher price which currently works out to around Rs.14 per kg in terms of realisation of the factory. The government pays for the freight distribution.