64% mills closed yet sugar industry thrives in Bihar

BIHAR BALLOT

For all those who have revelled in stories about Bihar's rapid journey into decadence, here is the mother of all such stories.

The Lalu Prasad-led Rashtriya Janata Dal (RJD), whose election symbol is lantern, has supervised the winding up of the state's only lantern making unit in Dumraon, a three-hour drive from Patna.

While there is no denying the rapid and tragic flight of industry from Bihar, it is not without positives. Ironically, the biggest of these positives is in the sugar industry, often cited as a prime example of the state's de-industrialisation.

The "prime example" status has been accorded to the industry largely because of the shutting down of 18 of the state's 28 sugar mills in recent years. But the silver lining, often overlooked, is that even with only 10 mills remaining, the total capacity has actually gone up to 37,500 tonnes sugarcane crushed per day (tcd) from 34,123 tcd in the flourishing years of the 1980s when 28 mills were thriving.

The silver lining shines brighter as one delves deeper into the numbers.

In the 1980s, 15 state government mills had a capacity of 15,990 tcd. The BIC group of Kanpur had three mills with a 3,900 tcd capacity. The rest of the private sector operated 10 mills with a capacity of 14,650 tcd.

All the state government mills and the BIC's three mills have closed. But the 10 private sector mills have increased their total capacity from 14,650 tcd in 1990 to 37,500 tcd.

Given the universally accepted cost of Rs 2 lakh to set up every one tcd capacity, one can safely assume that the private sugar mills have pumped in no less than Rs 457 crore in the last 15 years.

The state has taken note of this and, according to representatives of the Bihar industry, drawn up a financial package for sugar mills, new as well as the existing. The package is believed to have tax set-offs as well as a capital subsidy of up to Rs 10 crore.

Given that the Election Commission's code of conduct is in force, no politician or bureaucrat is willing to talk about the package. But industry players say it has been approved by the governor and may be announced as soon as a new government is in place.