Sugar sector sees better days ahead: Abinash Verma

Contrary to expectations, the Budget did not suggest any sugar sector reforms. During the past few weeks, the general understanding of the market was that the government would announce abolition of the regulated release mechanism and removal of levy sugar obligation from the industry; open market consumers and cane farmers.

By Rangarajan Committee, the annual additional burden on the government would be Rs 3,000 crore. This, compared to the food subsidy bill of around Rs 1,00,00 crore, is just about three per cent. It is best left to the finance ministry to decide and plan on how to manage the additional responsibility, after the first phase of reforms of the sector.

The economic survey suggested removal of the controls from the "over-regulated" sector in a phased manner. Pitching for decontrol of the sector, the survey states "the sugar industry in India is over-regulated and prone to cyclicality due to price interventions". It has suggested government interventions only in situations where it's absolutely necessary, adding "from a purely economic point of view, greater play of market forces would provide better prices and serve the interests of all stakeholders". Taking this as an important indicator, the sugar sector would be hopeful for better days soon.

Abinash Verma

Director General, Indian Sugar Mills Association