A remunerative procurement price would also be fixed for sugarcane, he told the BJP parliamentary party meeting here.

Parliamentary affairs minister Madan Lal Khurana said Vajpayee had told the BJP MPs that sugar was now being imported from various countries, including Pakistan, to tide over the current shortage.

Vajpayee's assertion follows the sugar industry's concern over the finance minister's "unnecessary interference" in witholding the proposed additional hike of 20 per cent in import duty on sugar. In a memorandum, the industry said that the finance minister has made "unwarranted comments" about the likely hike in open market prices of sugar in case additional import duty was imposed.Sinha's comments do not hold water and the nodal ministry for sugar was correct in recommending the duty hike, the industry said.

The industry associations has made it clear to the prime minister that the imposition of additional duty will in no way increase open market prices if the government uses its powers under the release mechanism and the powers vested with it under the Essential Commodities Act.

The industry stated that there will be about 200 lakh tonne of sugar in the country with current year's production slated at 154 lakh tonne, previous year's carryover stock of 54 lakh tonne and imported sugar amounting to 11 lakh tonne. As against this, the total consumption demand in the country for the year is only 143 lakh tonne. With such a huge stock of sugar in the country, the price rise in open market cannot be possible.

Normally the government makes quarterly releases of sugar to the tune of 11 lakh tonne per month which includes 4 lakh tonne for PDS and 7 lakh tonne for open market sales. Ifgovernment so desires it can increase the quota for releases in the event of any possible rise in open market prices. At present the average price of sugar in open market all over the country is Rs 15.50 per kg as against the ex-factory price of Rs 13.50 per kg.

Besides under the provisons of EC Act, only licensed dealer is allowed to sale sugar in open market. He can only purchase a definite quantity of sugar per month and sale a definite quantity within 15 days.

The government can very well use these provisons under the EC Act to prevent hoarding and blackmarketeering leading to possible rise in prices. Last week, food minister Surjit Singh Barnala had said his ministry would put up a fresh proposal for increasing import duty on sugar before the cabinet after Sinha had shot down a proposal sent in early October.