I think we are meeting after one month again. This is a preliminary meeting, we discussed various issues facing sugar sector. In the next six months, we hope to submit the report, Rangarajan said.
Kaushik Basu, the chief economic advisor to the finance ministry and also a member of the panel, stressed the governments seriousness in resolving the issue. We are serious about this (sugar sector decontrol). Many countries like Brazil have really flourished and we want this to happen in India as well.
The potential of this sector has not been realised in India. We will write a serious report. I am keeping my fingers crossed, Basu added.
At present, the government decides on the quantum of sugar mills can sell in the market each month and has mandated them to supply 10% of their output, called levy sugar, at below-cost for state-run welfare programmes. It decides the minimum price the mills have to pay for sugarcane purchases and also imposes periodical limits on sugar stocks large buyers can hold.
Industry executives complain that such regulations are leading to a regular cycle of boom and bust in sugar output and also stifling the growth of the sector.
In January, Prime Minister Singh had formed the committee, comprising Rangarajan, Basu, food secretary BC Gupta, agriculture secretary PK Basu, former agriculture as well as food secretary T Nanda Kumar, chairman of the commission for agricultural costs and prices Ashok Gulati and Economic Advisory Council Secretary KP Krishnan.
Singhs intervention was required to reassure a concerned industry of a serious look into its legitimate demands.
Sandwitched between high cane pricesoften used by state governments as a tool to woo voters and low sugar sales realisation, the cash-strapped sugar industry has renewed calls this year for lifting of the the government control. The Indian Sugar Mills Association and the National Federation of Co-operative Sugar Factories have been demanding freedom from the levy obligation, which they say is causing the industry losses up to R3,000 crore a year, and the abolition of the monthly sugar sales quota, to start with.
Indias sugar futures gained on Monday as exports prospects brightened after the government last week notified details of shipment terms for fresh exports of one million tonne, and on expectations of a lower quota for sales in the open market in March. The benchmark April contract on the National Commodity and Derivatives Exchange rose 0.51% to R2,949 a quintal on Monday