House Panel Favours Sugar Delicensing

The parliamentary standing committee on food, civil supplies and public distribution has said sugar delicensing will encourage setting up and functioning of economically viable sugar units.

Stating their earlier recommendation of delicensing sugar industry in the interest of cane growers, industry and farmers, the committee said that principles of prudent economics have not been followed in considering the question of delicensing of sugar industry.

Delicensing would facilitate diversification by way of using by-products efficiently and improve financial position of sugar units, it said.

The government, which had recently announced revised norms for issuing licenses, stated in the guidelines that the new sugar factories would continue to be licensed for a minimum economic capacity of 2,500 tonnes cane crushed per day.

The industry, however, was disappointment with the revised guidelines, saying that reducing spatial distance to a bare 15 km between two factories would virtually provide an area of operation equal to a radius of barely seven-and-half km.

Expressing concern over the mounting cane arrears, the committee noted that the Reserve Bank of India (RBI) was considering to provide need-based credit to sugar industry to ease liquidity crunch.

To reduce the arrears to the minimum, the committee recommended incorporation of a provision similar to Section 17 of Uttar Pradesh Sugarcane Act, 1953, in Sugarcane (control) Order, 1966.

This would enable issuance of recovery certificate by the cane commissioner towards the cane price arrears and would empower the collector to recover the amount specified in such case, as if it were an arrear of land revenue.

Regarding sugarcane pricing policy, the committee has favoured quality-based pricing and said much of the distortions in the pricing structure of sugarcane can be corrected by the introduction of quality based pricing policy.

The present sugarcane pricing policy is tonnage-based, with no regard for quality, the committee said.

The commission for agricultural costs and prices (CACP) has failed to come out with a realistic sugarcane pricing policy.

The committee has called for formulation of a development programme for the sugar industry for the ninth plan, as suggested by the task force on sugar industry.

Sugar manufacturers have also called for a sugarcane pricing policy based on quality of cane.