J. Jayalalithaa, the Chief Minister of the south Indian state of Tamil Nadu has said that the decision by the union government to partially decontrol sugar prices in the country will affect the supply of sugar through the Public distribution System (PDS).

She demanded that the government should either impose obligation for sugar mills or offer a guarantee that it will subsidise price difference between open market price of sugar and the subsidised price being offered under the PDS.

She wrote a letter to Prime Minister, Manmohan Singh protesting the decision by the central government for scrapping the levy obligation for sugar mills that guaranteed of supply of 10 per cent of their production to the PDS at sub market prices. The system helped in regulated supply fo sugar into the market and kept the prices under control.

Meanwhile, the Indian Sugar Mills Association has said that the production of sugar in the Indian market might fall mainly due to falling domestic prices because of cheaper imports and as dry weather affects plantation of sugarcane during the year from October.

Jayalalithaa also pointed out that the decontrolling of sugar prices would make the commodity venerable to open market pricing and also increase the subsidy burden of the state government.