The South Indian Sugar Mills Association (SISMA) has requested the prime minister Manmohan Singh to decontrol the industry at the earliest on lines of petroleum pricing. The union government that following the logic and economic rationale proclaimed on petroleum pricing, must immediately come forward to free sugar from excessive State control.
?It is high time that the government decided on early decontrol of this core sector,? said N Ramanathan, president of SISMA in Tamil Nadu.
?It is noted the Prime Minister has recently asserted that petroleum prices will be left to be determined only by the market forces and there would only be more of deregulation of this sector. This conveys the clear intent and conviction of the underlying policy direction of the government to not interfere with product pricing of commodities but allow the same to move in line with market forces,? he said.
This salutary stand of the government has obviously stemmed from gross under recoveries faced by petroleum companies. The sugar industry, however, finds it odd and hard to understand the differential and discriminatory stand being taken by the government when it comes to this important commodity.
Ramanathan said that there is till date persistent and perpetual interference from the government in tinkering with the market prices of sugar. After cornering 10% of industry?s production, known as levy sugar to meet PDS requirement, the balance 90% is also controlled through monthly release mechanism. Excessive releases dampen market spirits to depress prices.
It is still worse, the government inimically interferes with sugar exports, despite sugar being under OGL, with paltry quotas distributed on pro-rata basis. At a time when domestic sugar prices languish below cost of production, sugar mills are deprived of the rare opportunity provided by world sugar market where global sugar prices now command a considerable premium to our local prices.
There can be no denying that sugar is far less important and has far lower impact compared to petroleum products in influencing, or impacting general inflation.
After taking care of BPL families through PDS, there is no rationale whatsoever in interfering with the price of sugar that is consumed by industrial and commercial segment.
In this bargain, the depressed sugar prices directly hit the sugarcane farmers resulting in delay followed by default in payment of cane prices, he said further.
