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 prices of the commodity, which, mills complain, bleed their balance sheets when sugar price remains subdued.
The food ministry has already sought responses from key cane-producing states regarding the Rangarajan panel report, submitted last month. If implemented, the scrapping of levy burden alone would leave an additional Rs 3,000 crore a year with the cash-starved sector, but it will also raise the Centre’s food subsidy burden accordingly.
Efforts at lifting government control twice in the 1970s met fierce political resistance, mainly on concerns that domestic sugar prices would shoot up, and the issue was dropped. The benefits of liberalisation have also not been extended to the sugar industry, while the government has shed control over sectors such as telecom and cement over the years. Moreover, recommendations of panels, including the Mahajan committee, Tuteja committee and Thorat committee, set up in the past to consider decontrolling the sugar sector, were hardly implemented.
However, last month, food minister Thomas had said the government would take a time-bound decision on the committee's recommendations on decontrol and won't relegate them to the background.