New way to arrive at revenue from sugar, by-products needed: C Rangarajan

Interview with Chairman, PMEAC

India's sugar sector is in a crisis. With mounting sugarcane arrears and falling product prices, millers in many parts of the country, mostly in Uttar Pradesh have declined to purchase cane from farmers in 2013-14.

To end the uncertainty in sugar sector, Chairman of Prime Minister's Economic Advisory Council, C Rangarajan had suggested a revenue-sharing formula to determine the price that each sugarcane mill will pay to the farmer.

In an exclusive interview with Sanjeeb Mukherjee, Rangarajan said that if states agree then new methods to determine revenue for sharing can be developed. Edited Excerpts.

Are u willing to have a re-look at the revenue sharing formula as suggested by you in the report on sugar sector reforms?

Well, the basic premise of the formula remains the same that is revenue-sharing what we have suggested that if states agree in principle to this method then we are willing to have a re-look at the numbers i.e. 75% of sugar price and 70% of sugar plus by-products price should be the sugarcane price paid by mills to farmers.

So there will no new formula as such ?

There is no scope of new formula. We have arrived at this after much deliberation. The basic premise will remain the same, but only the numbers can be reworked.

Then how would be the new numbers different from the existing ones, and also how do you view this whole sugar imbroglio. What is way out?

The basic problem is with states not accepting the revenue-sharing formula suggested by Rangarajan Committee. We have arrived at this formula based on full-proof mechanism to determine revenue, be it from sugar or by-products.

What we are now suggesting is that new mechanisms agreeable to states and all others could be put in place to determine revenue both from sugar and by-products. The principle of revenue-sharing remains at it is.

Also, there is suggestion in some quarters that Centre should keep its hands off the whole crisis as the problem is created by states and they should solve it? Centre should not give any sort of bailout for millers. What is your view?

In reality, it for the Centre and states jointly to arrive at a solution. There is a problem and Centre has to work with the state governments to come to a solution.