Sugar muddle

The sector must undergo market reform

The sugar industry, known for crying wolf most of the time, is at present facing a financial crisis that seems real. The banks’ move to put the sugar sector on the “caution list” for fixing borrowing limits is clear evidence of that. Excess supplies have dragged ex-factory sugar prices  below production cost, leading to an accumulation of cane price arrears of Rs 180 billion. The bulk of these are accounted for by sugar mills in Uttar Pradesh, which have to incur a relatively high cost for sugarcane procurement because of the state-advised cane pricing system. The country’s sugar output is