Govt mulls IMG to vet sugar decontrol report

Nov 30 2012, 04:06 IST
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SummaryThe government is considering setting up an inter-ministerial group, to be headed by agriculture minister Sharad Pawar, to examine recommendations of the Rangarajan panel on deregulating the sugar sector.

The government is considering setting up an inter-ministerial group, to be headed by agriculture minister Sharad Pawar, to examine recommendations of the Rangarajan panel on deregulating the sugar sector.

“An IMG could soon be set up as the government wants to consider implementing at least some of the proposals submitted by Prime Minister's Economic Advisory Council (PMEAC) chairman C Rangarajan, if not all. At least those proposals which can be implemented by the Centre alone could be looked into,” a senior government official told FE.

The IMG may comprise ministers of finance, food, commerce and new and renewable energy, he added.

The Rangarajan panel, set up by Prime Minister Manmohan Singh in January, suggested in October that mills be freed from the obligation of supplying subsidised sugar for the public distribution system (PDS). The committee also pitched for the scrapping of the release order mechanism through which the government controls sugar sales in the open market and sought to link the price of sugarcane to its byproducts, among others.

The panel suggested the linking of sugarcane price to the rates of its byproducts, and that 70% of ex-mill prices of sugar and each of its three major by-products — bagasse, molasses and press mud — be paid to farmers for cane supplies. The benchmark price fixed by the Centre — also called the fair and remunerative price (FRP) — be the minimum price for cane purchases, it added.

It has also suggested a “stable” export and import policy on sugar and “appropriate tariff in the form of a moderate duty on imports and exports, not exceeding 5-10% ordinarily, as opposed to outright ban or quantitative restrictions, should be used to meet domestic requirements of sugar in an economically efficient manner".

Apart from linking cane prices to the byproduct rates where states have a role and cane are de-reservation, all other major recommendations, including on levy sugar and release order mechanism, can be implemented by the Centre, industry executives said.

At present, mills are mandated to sell 10% of their output to the government for the PDS, known as levy sugar, at cheaper rates that cover just around 70% of their cost of production. The government also fixes the quarterly quota of sugar that mills are required to sell in the open market, aimed at discouraging hoarding and keeping supplies steady. Moreover, while the Centre fixes the minimum benchmark price of sugarcane, some states notify much higher

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