India, Aug. 22 -- The government on Friday said the recent surge in sugar prices cannot be attributed to the diversion of sugar for ethanol, pointing instead to lower-than-expected domestic production, higher festive-season demand, and weather-related crop damage.

Average retail sugar prices rose from Rs.48.18 per kg on July 20 to Rs.58.20 per kg on August 21, according to data from the consumer affairs ministry's price portal. The price surge has prompted the government to step up measures to curb hoarding and allow sugar imports for the first time in nearly a decade to augment domestic availability ahead of the festive season.

According to an official release, the share of sugar diverted for ethanol has declined from around 12% of pro...