Centre moves a sugared step closer to Lucknow?

Whether it is Chennai, Mumbai or Lucknow, governments are likely to scramble to claim credit for the rise in import duty of sugar by the Centre and the link to payment of arrears to cane farmers.

The move will have a dramatic impact on politics, especially in Uttar Pradesh, where Chief Minister Akhilesh Yadav told Business Standard last week: “All the Centre has to do to alleviate the suffering of cane farmers in UP to increase the import duties on sugar. That way, the industry will be able to pay arrears to cane farmers, who are going through a very hard time.”

On May 30, the Allahabad High Court had said the UP cane commissioner would be held responsible if farmers’ arrears were not settled by the next hearing in July. In December last year, unable to pay back loans, cane farmers in Lakhimpur Kheri had committed suicide and Bharatiya Janata Party president Rajnath Singh had headed a delegation of the party to the region. In his speech at the BJP National Council meeting in January this year, Singh had demanded the import duty on sugar be raised and the support price for cane be increased over “a measly Rs 280 a quintal”.

On Monday, the central government acted on Yadav’s demand and Rajnath Singh’s (now Union home minister) exhortation. Yet, there is a downside. While conceding the open market price of sugar will go up, alienating the urban constituency, industry says the move will bring much-needed relief to the farmer. “Even a Rs 5 a kg hike in open market sugar prices will mean only an increase of Rs 20 a month per household; four kg is the average Indian household consumption of sugar a month. The move will mean we can pay farmer’s arrears. Current prices are below the cost of production,” said Rajshree Pathy, managing director of Rajshree Sugars and Chemicals.

Assembly elections in Maharashtra are due later this year. The Centre is keen to create favourable conditions for the BJP and, internally, is weighing the possibility of holding early Assembly elections in UP, where they are due only two years hence. In Tamil Nadu, the BJP has little organised presence in sugarcane growing areas but is conscious of political traction for Narendra Modi. It is in Maharashtra and UP that the BJP is eyeing political gains from the move.