Govt may rework pricing Ordinance for sugarcane

Lok Sabha adjourned following Opposition protests

The Manmohan Singh government is trying to find a middle path in the impasse over the recent sugarcane pricing Ordinance that created an uproar inside and outside Parliament today. According to top sources in the United Progressive Alliance (UPA), the government may rework the Sugarcane (Control) Order to relieve the states' burden and appease a united Opposition that claims to have the power to defeat the Bill in the Upper House. The shift in the government's stand came after a meeting between Prime Minister Manmohan Singh and Congress General Secretary Rahul Gandhi this morning.

“Rahul Gandhi met the PM to convey the sentiments of the sugarcane growers in UP. The PM has assured him that the government will look into the matter again and said if it was in the interest of farmers the Ordinance would be suitably amended,” senior Congress leader Digvijay Singh said.

The government will call an informal breakfast meeting with leading political parties on Monday and is likely to call an all-party meeting to resolve this issue later next week.

The new ordinance, promulgated last month, introduced a fair and remunerative price (FRP) as a uniform price at which mills will procure sugarcane. Before this, the states — mainly Uttar Pradesh and a few others — announced a procurement price (the SAP or state-advised price) over and above the Centre-advised price which the mills had to pay. The new ordinance now requires state governments to pay the difference over and above the FRP.

After the Lok Sabha was adjourned this morning following protests from the Opposition and UPA supporters like the Samajwadi Party, Prime Minister Manmohan Singh held a long meeting with Food Minister Sharad Pawar, Finance Minister Pranab Mukherjee, Home Minister P Chidambaram, Law Minister Veerappa Moily and others.

A senior UPA minister said many questions were raised during the PM’s meeting and legal clarifications sought. “Since this is a year of low sugarcane output, mills are already paying prices much higher than FRP and SAP. So the situation doesn’t warrant the implementation of FRP. But if sugar prices fall in the coming years, the government may face trouble,” he said.

Earlier this month, Pawar had said, “The FRP is just a guideline and mills cannot pay a price lower than this. However, we expect mills to pay more than the FRP since sugar realisation is Rs 3,000 a quintal.”

Representatives from the farmers’ lobby also met government officials. They have reportedly brushed aside the food ministry’s arguments and claimed those legal arguments don’t hold water. Pawar later held a meeting with law ministry officials. The opposition parties also indicated they are ready to support the government to offset the Rs 14,000 crore burden to the sugar mills but would not accept any dilution of the SAP. 

The Rs 14,000 crore obligation is a result of litigation by SAP-paying sugar mills, especially in Uttar Pradesh.

“We told the government we are ready to support any mechanism required to wash away the Rs 14,000-crore burden that has arisen due to court orders on levy sugar. But the government can’t make the SAP irrelevant,” BJP’s deputy leader of Lok Sabha Sushma Swaraj said after the Business Advisory Committee meeting of the Lok Sabha this evening.