Parliamentary panel against sugar decontrol

The parliamentary panel on food and agriculture has recommended against sugar decontrol, claiming the move will go against the interest of farmers as well as consumers. The views of this panel, expressed in a report tabled in the Parliament yesterday, are not binding.

“The committee is of the opinion that if the entire control on manufacturing and distribution of sugar is removed, the PDS scheme will be adversely affected, as sugar mills will be under no obligation to supply levy sugar at the ex-factory price fixed by the central government,” the committee headed by Congress Member of Parliament Vilas Muttemwar has said.

The committee is also of the view that sugar mills may take the benefit of decontrol and stock sugar in their godowns with a view to jack up prices, especially when there is a shortfall in production of sugar.

The committee feels the country is already facing a problem of deficit production in and decontrol will add fuel to the fire. The committee, therefore, recommends that the government not adopt the concept of decontrol and deregulation of sugar, as it may not be in the interest of farmers and consumers.

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 controls on major industries like steel and cement.

The control on sugar is exercised by way of release mechanism and levy obligation. In June, the government removed control on petrol pricing and expressed an intention to free diesel as well. The Union food ministry has been discussing the issue of decontrol with industry associations for the last couple of months.

Sugar mills can sell in the open market only according to the release mechanism. The Directorate of Sugar in the Union government issues release orders every month and gives mill-wise sale quotas. Mills cannot sell above this quota. A penalty is levied if they fail to sell the quota within the stipulated month.

The government tweaks this system when there is a shortage. This year, for instance, the government resorted to weekly and fortnightly release mechanisms.

Under levy obligation, mills sell a certain per cent (currently 20 per cent) of their produce to the government at lower than the market price. This is supplied to below poverty line families through the public distribution system.