Committee to study sugar decontrol

Prime Minister Manmohan Singh on Friday constituted a committee headed by his Economic Advisory Council chairman, C Rangarajan, to examine issues related to deregulating the sugar industry.

The declaration comes at a time when the biggest sugarcane and second biggest sugar producing state, Uttar Pradesh, is heading for assembly polls, while civil polls are coming up in the biggest sugar producing state, Maharashtra.

“The committee would look into all the issues relating to de-regulation of the sugar sector and it has been requested to complete its task as early as possible and give its recommendations to the Prime Minister,” a statement issued by the PM’s Office said.

Other members of the committee are Kaushik Basu, chief economic advisor in the finance ministry; Ashok Gulati, chairman of the Commission for Agricultural Costs and Prices; T Nanda Kumar, former Union food and agriculture secretary, and the present agriculture and food secretaries.

While welcoming the move, the industry said the committee recommendations should not just remain on paper, as had been the case with past reports from the Tuteja committee, Thorat Committee.

Efforts were also made by former food minister Sharad Pawar in mid-2010 when he had met Singh to pitch for decontrol. “Several committees and expert bodies in the past have given unanimous recommendations to deregulate the sugar industry. This time, the recommendations should be implemented on a fast-track basis,” said Vivek Saraogi, managing director, Balrampur Chini, that owns 10 mills and is the country’s second biggest sugar producer after Bajaj Hindusthan. Abinash Verma, director general, Indian Sugar Mills Association, said the new committee consists of people who are experienced and know about the industry.

“We look forward to some positive and quick recommendations from the committee that will take care of the industry as well as farmers’ interests,” he said. Cooperative sugar mills that account for around 45 per cent of production, have also welcomed it. “The situation is right for decontrol ,as we are going through a surplus phase. We really hope the recommendations will get implemented this time,” said Vinay Kumar, managing director, National Federation of Cooperative Sugar Factories.

Sugar is one of the most controlled industries in India. Attempts to decontrol it were made in 1971-72 and in 1978-79, only to be rolled back. The government has over the years eased earlier controls in other major industries like steel and cement.

Mills can sell in the open market only according to the release orders issued each month by the directorate of sugar in the Union government.

It gives mill-wise sales quotas. Mills cannot sell above this and a penalty is levied if they fail to sell within the stipulated month. Also, the government directs how much mills are to sell (presently, 10 per cent) of their output to it, at a price it fixes, for distribution through the ration shop system.

Exports are subject to government order, too. For that matter, cane procurement by mills is also decided by the government, catchment area and price.