Although there have been no direct promises by the union consumer affairs ministry on the issue, industry sources said that in the recent meeting between the ministry and the industry to discuss the Mahajan committee's recommendations, a lot of pressure had built on the government to create a buffer stock.

According to a industry official, earlier only the sugar industry had tried to convince the government of the need to create a buffer stock. However, at the meeting other stakeholders like farmers' associations, consumer representatives and a number of members of parliament `took the ministry to task' for not taking the required action even in the face of mounting sugar stocks.

"Since the consumer affairs ministry could not give any explanation as to why the buffer had not been created, we are sure that now it will be bound to take measures in the direction," the official said.

The industry was of the view that as there was a special fund for creation of buffer stocks, there was no reason for the government to show its hesitation.

A central cess was introduced in 1982 for creating a corpus to fund buffer stocks. Under the Sugar Cess Act, it was stated that a cess of Rs 90 per tonne of sugar would be charged from the industry with the specific purpose of creation of buffer stock whenever required.

Money from the fund was used to create buffers in 1982, 1983, 1995 and 1996. However, the industry could not convince the government after that to create stocks. Manufacturers said that the industry had been saddled with excessive stock for more than two years but the government had till now turned a blind eye to that. "There is a net balance of Rs 1,200 crore in the fund for creating buffer stocks but it is lying unused. The government can easily use a part of it to help the industry in its time of need," the industry official said.

He added that unlike rice and wheat, the government is not required to put in much efforts to maintain a sugar buffer. "When the government buys sugar to create a buffer, the sugar remains in the warehouses of manufacturers. The only thing that the government has to do is to fund the interest cost and that too only on a six monthly basis."

The country is expecting production of sugar to touch 180 lakh tonnes in 1999-2000.The increase is more than 30 lakh tonnes when compared to last year's production figure of 149 lakh tonnes. The projected 18 per cent growth plus the carryover stock of 67.5 lakh tonnes from the previous year will worsen the condition of the domestic industry. Sugar stock is likely to touch 100 lakh tonnes by the end of the current sugar year. The industry is hopeful that the Centre would agree to lift at least 25 lakh tonnes of sugar and provide it with some relief.