NEW DELHI: The government may extend its reforms push to the sugar sector after an influential panel recommended allowing millers to freely sell sugar in the open market and share 75% of the sugar’s value with sugarcane farmers.
The committee, headed by Dr C Rangarajan, chairman of the prime minister’s economic advisory council, has also suggested that state governments should buy sugar from the open market to supply to ration shops instead of asking mills to sell 10% of their production at a loss to the government.
“The central government would continue to incur Rs 3,000 crore annual subsidy in selling sugar through the ration shops. The subsidy will be distributed among state governments and then they will fix the price of sugar as per their financial strength,” Rangarajan said.
Now, the food ministry will have to move the cabinet for its approval before the implementation of these recommendations.
“The ministry will decide after taking suggestions from other ministries and stakeholder. We can’t fix a time frame for that,” said food secretary Sudhir Kumar.
Laying out the roadmap for reforms in the sector, the report says, “Rationalisation of sugarcane pricing and liberalization of sugar trade need to be introduced over a two to three year period, in a calibrated and phased manner.” However, levy sugar obligation and administrative control on non-levy sugar need to be dispensed with immediately, it added.
The committee has recommended a two-step arrangement for payment to farmers. It said that the Fair and Remunerative Price (FRP) as determined by the Central Government should be paid upfront to sugarcane farmers every year. Following that after every six months sugar mills should share the revenue earned from selling sugar and also its byproducts like bagasse and mollasses in a proportion of 75:25 in favour of the growers. The price of sugar (ex-mill) and its byproducts for calculating this ration should be published by the state governments on a half yearly basis. “States willing to adopt this system of paying the sugarcane arrears, should then not declare the State Advised Price, which is essentially higher than FRP,” Rangarajan said.
The sugar industry is under government control, right from sale of cane and sugar output to distribution and exports. Under regulated release regime, the food ministry fixes the quantity of sugar that mills can sell in the open market and ration shops. Agencies
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