The Telegraph
Saturday , October 13 , 2012
Since 1st March, 1999
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Panel roots for sugar decontrol

New Delhi, Oct. 12: Advocating decontrol of the sugar sector, the Rangarajan panel today suggested freedom to mills to sell their entire output in the open market. The government, the panel says, should end the practice of fixing a quota for sale in the open market along with purchasing 10 per cent of the output of mills at below-market prices for sale through ration shops.

The panel, headed by C. Rangarajan, recommended mills to share 70 per cent of their revenues with about 50 million cane growers, while opposing any ban on exports and imports.

“Rationalisation of sugarcane pricing and liberalisation of sugar trade need to be introduced over a two to three-year period, in a calibrated and phased manner,” the committee said in the report.

“Sugar is like any other commodity. Why should there be so many restrictions?” Rangarajan told reporters.

Commenting on the recommendations, food minister K.V. Thomas said his ministry would take a timebound decision after the Prime Minister’s Office examined the report.

While other sectors of the economy have been freed, sugar continues to remain under government control, right from the level of production to distribution. The Centre fixes the quantity of sugar that mills can sell in the open market and ration shops.

“Levy sugar obligation and administrative control on non- levy sugar needs to be dispensed with immediately,” Rangarajan said.

Instead, the panel suggested that states buy sugar directly from the open market for ration shops and sell the same at a price determined by them. It also said that the Centre should give Rs 3,000-crore subsidy to the states to bear the procurement expenses.

Rangarajan felt the removal of these two controls would not affect domestic prices, but rather improve the financial health of sugar mills, thereby ensuring timely payment of cane arrears to farmers.

The panel wants 70 per cent of the revenues generated by mills to go to sugarcane farmers. “That alone should be the yardstick for the price they should get,” he said.

In the process, the panel wants both statutory minimum price, or the minimum price for sugarcane fixed by the central government, as well as the state advised price fixed by some states to be abolished.

On exports, the committee favoured a stable policy regime with modest tariff levels of 5 to 10 per cent ordinarily and dispensing with outright bans and quantitative restrictions.

“The Indian Sugar Mills Association welcomes the recommendations of the Rangarajan committee,” said the association’s director-general Abinash Verma.