Farmers will get better deal in revenue-sharing formula: Rangarajan

Q&A with C Rangarajan, Chairman of Prime Minister's Economic Advisory Council

The high-powered committee on regulations in Indian sugar sector headed by Chairman of Prime Minister’s Economic Advisory Council (PMEAC) C Rangarajan has made some path-breaking recommendations --- like the revenue-sharing formula between millers and sugarcane growers – which if implemented could change the face of India’s Rs 80,000 crore sugar sector.

In an exclusive interview with Sanjeeb Mukherjee, Rangarajan said that the suggestions if implemented will benefit all stakeholders be it millers, producers or end consumers of sugar. Edited excerpts:

Will the recommendations ultimately lead to government losing all control over the sugar sector as is being anticipated by many?
No, the word decontrol has not been used once in our report. After all, we have said the right to determine the Fair and Remunerative Price (FRP) and the revenue-sharing arrangement still rests with the government. Our major recommendation has been on the 70:30 revenue-sharing arrangement. We have said that imposition of levy should go. We have also said that government’s power to determine release order should be done away with. To that extent there is some relaxation from controls. But, the recommendations regarding the FRP and revenue-sharing should not be treated as lack of control over the sugar industry.

In the 70:30 revenue-sharing arrangement that your report talks about. Do you think that farmers will stand to gain?
Revenue-sharing is an important recommendation for the sugar sector in the sense that it will end the cyclicality. Farmers will stand to gain much more than they currently do because as per our assessment in most regions they do not get more than 55-60 per cent of the total revenues earned from sugar and its by-products. If our recommendations are implemented they would get a better deal.

There is also a lot of apprehension that if your recommendations are implemented in full over a period of time, the retail price of sugar will rise. How far do you think it is correct?
I think if our recommendations are implemented by full, the production and productivity of sugarcane will improve which will have a favourable impact on prices. But, it must also be remembered that sugar is like any other commodity and which commodity has not seen a price rise in the last few years.

Finally, implementing many of the recommendations like the revenue-sharing formula between millers and farmers states will have a major role to play. How amiable are the State governments in implementing the suggestions?
Well, we have discussed with the states and most seem to agree with the suggestions. Off course, there are issues like abolishing the levy sugar mechanism which Centre has to do. Anyways, we have also said them once the system is abolished the subsidy will shared between the Centre and the states. Regarding, recommendations on the revenue-sharing arrangement, I think some state governments are enthusiastic, while some have shown a reluctance. Let’s see, what happens. We have given the recommendations which will benefit all stakeholders in the Indian sugar industry.