Revenue-sharing will offer farmers a better deal: C Rangarajan

Interveiw with Chairman, PMEAC

The high-powered committee on regulation in India’s Rs 80,000-crore sugar sector, headed by C Rangarajan, chairman of the Prime Minister’s Economic Advisory Council, has made some path-breaking recommendations, including a revenue-sharing formula between millers and sugarcane growers. In an interview with Sanjeeb Mukherjee, Rangarajan says if implemented, the recommendations would benefit all stakeholders — millers, producers and end-consumers. Edited excerpts:

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

Would farmers benefit from the 70:30 revenue-sharing arrangement your report mentions?
Revenue-sharing is an important recommendation for the sugar sector, as it would end cyclicality. Farmers would gain much more than they currently do, because according to our assessment, farmers in most regions do not get more than 55-60 per cent of the revenue earned from sugar and its by-products. If our recommendations are implemented, they would get a better deal.

Some are apprehensive if all your recommendations are implemented, retail prices of sugar would rise.
I think if all our recommendations are implemented, production and productivity of sugarcane would improve, which would have a favourable impact on prices. But it must be remembered sugar is like any other commodity. Which commodity hasn’t seen a price rise in the last few years?

States would play an important role in implementing many of your recommendations, including the revenue-sharing formula between millers and farmers.
Well, we have had discussions with states, and most seem to agree with the suggestions. Of course, there are issues such as abolishing the levy-sugar mechanism, which the Centre has to carry out. We have also said once the system is abolished, subsidy would be shared between the Centre and states. On the revenue-sharing recommendation, I think some state governments are enthusiastic, while some have shown reluctance. Let’s see what happens. We have recommended steps that would benefit all stakeholders in the Indian sugar industry.