Sugar, though sweet to taste has always been a "sour" point that pitchforks GOI and the sugar sector on a collision course ever since India's independence. While during the "license and permit raj" the sugar policy to force the industry to sell to the PDS a major part of its production at below production cost was considered normal, after the economic liberalization policies of early nineteen nineties continuing with it is nothing but an anachronism. More over India is the world's second largest producer of cane sugar and the industry holds large stocks not being able to achieve freedom regarding sale of its products guided by market forces. Though there has been some talks regarding freeing the sector from GOI controls, nothing concrete seems to be happening except frequent announcements by the concerned bureaucrats and ministers about their "intent" to decontrol. The latest such pronouncement comes from another Babu in the Food Ministry and industry keeps wondering whether any action at the ground level will follow this.
The government is open to lifting a decades-old control over the sugar sector if interests of farmers as well as consumers are protected, food secretary BC Gupta said on Tuesday. Currently, the government decides how much sugar mills will sell in the market every month and has mandated them to supply 10% of their output at below-cost for state-run welfare programmes. It decides the minimum price the mills have to pay for sugarcane purchases and also imposes periodical limits on sugar stocks large buyers can hold to discourage hoarding in times of a shortage. Industry executives say all these regulations are leading to a regular cycle of boom and bust and also stifling the growth of the sector that hasn't attracted any foreign direct investment for years now. "There is no stumbling block in decontrolling the sugar sector, provided farmers'... interests are protected. We have to see that farmers get fair price for their produce and also the interest of consumers shouldn't suffer," Gupta said. Any decision on loosening the control will be taken after consulting state governments and other stakeholders, he added. The secretary, however, refrained from giving any time-frame for lifting the regulations over the sugar sector. Industry executives say while mills pay high prices to farmers for cane purchases, they don't have any right to fix the price of sugar at which they sell to the government for supplies under the public distribution system. Although intended to benefit farmers as well as consumers, the tight regulations often lead to mills holding back payments to farmers whenever sales realisation drop below costs.
These are the days when sugar is receiving attention for all wrong reasons and many consumers consider it as white poison because of its purported contribution to diabetes and other life style disorders from which world is suffering. A logical question is whether GOI is justified in holding to the philosophy that sugar is an essential commodity and therefore needs subsidization! Probably sugar can even be considered for removal from the PDS basket that is being distributed, leaving the consumers to buy their needs from the open market. There is good possibility domestic consumption may come down drastically sparing the population the sufferings from modern diseases. After all most of the PDS sugar is siphoned off by unscrupulous elements of the society costing the exchequer heavily. If demand for sugar comes down, naturally the sugarcane cultivation, highly dependent on water, will also will decline, sparing the land for production of other more valuable and nutritious crops!
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