It is indeed for pleasing such a small segment of the population that the government is retaining sugar under the PDS, keeping the entire sugar industry in shackles through a plethora of controls. The 40 per cent levy on sugar mills is being maintained essentially to procure sugar for PDS supplies. While import of sugar is allowed under OGL at zero duty, the domestic industry is subjected to various levies, denying them a level playing field. The government is unwilling even to consider sugar price decontrol due largely to its PDS commitments and the fear of adverse political fall-out of such a move. But by not doing so it is stifling an important agro-based industry. The policy changes effected in the sugar sector after the initiation of economic reforms have only been half-hearted. In the name of delicensing, what the government has ended up with is only free licensing. In decanalising sugar exports, the government has merely shifted the onus of controlling exports from one organisation to another. Time is ripe for the sugar sector to be completely deregulated, letting it fend for itself in a free market. Let the market forces decide the price levels and a hassle-free import regime take care of price fluctuations. Market forces should also decide the production of sugar and sugarcane. Being the world's largest sugar producer, India need not be afraid of the global market. Fears about the cane growers' interests being jeopardized after deregulation is also unfounded. Sugar factories have to keep the growers happy to ensure steady and adequate raw material supply. Such total decontrol will not only save the subsidy bill but make the Indian sugar sector globally competitive and also, perhaps, a steady exporter.
