Mahajan Panel Moots Phased Decontrol Of Sugar Prices

The high-powered Mahajan Committee has recommended that sugar prices should be decontrolled in phases within two years, though the government should retain control of the amount to be released to the free market. It has also suggested that a cane pricing board be set up to fix cane prices, based on the statutory minimum price fixed by the Centre and the actual realisation by the factories. At present, cane prices are fixed by state governments, based more on political than economic considerations.

The committee has also recommended that sugar should either be taken out of the ambit of the public distribution system (PDS) or the government should buy the stocks from the market and bear the subsidy burden on its own rather than making industry cross-subsidise PDS supplies.

The committee has recommended that the present policy of licensing sugar factories with a minimum stipulated distance between two sugar or khandsari units should be continued. The present incentives to sugar units that have already come up or are under construction have also met with the committees approval.

However, units licensed in future will not be entitled to these incentives, notably freedom from levy obligations. Instead, they will receive assistance from either the sugar development fund or through a new levy on sugar. The wholesale sugar trade has been proposed to be freed from licensing restrictions.

The report of the committee, headed by former (retired) food secretary B B Mahajan, was presented to food minister S. S. Barnala yesterday. Set up on the directive of the Allahabad High Court, the committee included representatives of the private and cooperative sector sugar industry as well as the other concerned parties in the sugar sector, including cane growers and the governments of sugar-producing states.

The report is being viewed by various sections of the sugar sector as an attempt to accommodate different interests and viewpoints. The recommendations have been adequately padded with safeguards. Consequently, the 1,500-page, two-volume report