Sugar, ghee, flour: Ministry seeks increase in prices of subsidised items at USC

ISLAMABAD: The Ministry of Industries and Production has sought increase in prices of subsidised items - sugar, ghee, and flour (atta) - at USC, saying that people were purchasing these items from the USC outlets and selling them in the market for profit making, owing to widening gap in the prices.

The ECC meeting was requested by the ministry to revise upward prices of sugar from Rs 68 to Rs 85 per kg, atta per 20kg bag from Rs 800 to Rs 950, and per kg ghee from Rs 170 to Rs 260 because difference between subsidised prices and market prices of these essential items has been increasing financial burden on the national exchequer.

In addition, this gap of prices creates market distortions, resulting in people purchasing these items from the USC outlets and selling them in the market for profit making.

The ministry, in a summary, submitted to the ECC stated that under the Prime Minister's relief package 2020, Utility Stores Corporation (USC) has been providing five essential items - atta, sugar, ghee, rice, and pulses to the consumers at subsidised rates since January 8, 2020.

Provision of federal subsidy on these five items, originally limited to June 30, 2020, was subsequently extended to June 30, 2021.

The prices of five essential items being maintained by the USC under relief package since January 8, 2021 to date was atta at Rs 800 per 20kg bag, sugar at Rs 68 per kg, ghee at Rs 170 per kg, rice and pulses at Rs 15-20 per kg less than the market price.

While difference in USC subsidised prices of these commodities and market prices during January 2020 was between Rs 150-200 per 20kg bag of atta, Rs 30-40 per kg in the price of ghee, and Rs 5-12 per kg in sugar price, which has increased in June 2021 to Rs 286-435 per 20kg bag of atta, Rs 120-160 per kg ghee, and Rs 31-36 in per kg sugar.

The meeting was told that from October 2020 till June 2021, the government provided Rs 29.7 billion subsidy with Rs 778.8 million in October, Rs 1.210 billion in November, Rs1.136 billion in December, Rs1.598 billion in January 2021, Rs 1.741 billion in February, Rs 2.029 billion in March, Rs 4.578 billion in April 2021 (Ramazan), and Rs 5.940 billion in May 2021 (Ramazan), while Rs 2.904 billion subsidy was provided in June 2021.

The meeting was further told as the difference between subsidised prices and market prices of these essential items has been widening over time, the prices of these items may be revised upward.

Copyright Business Recorder, 2021