Sweet or sour?

It is not often that an industry like sugar, known for its constant breast-beating, admits to improved health and finances. It is even rarer to see an industry in the pink of health being targeted for official sympathy and talk about rescue and revitalisation. But, oddly enough, this is exactly what is happening.

The National Federation of Cooperative Sugar Factories made a public statement last week emphasising that the surge in sugar prices this year, after ruling low for the last five years due to over-production, had helped spark an economic revival in the industry.

The health of private sector mills can be gauged from the fresh investments coming into this industry. Many sugar companies' stocks are doing well on the bourses. But try telling that to Food and Agriculture Minister Sharad Pawar, who feels otherwise.

In recent weeks, Pawar has been talking about the closure of several units to build a case for financial assistance to this sector. Of course, he may have been talking about sugar factories in Maharashtra and, to some extent, in Karnataka, Tamil Nadu and Andhra Pradesh, where the sugarcane acreage has dropped due to drought, the depredations of woolly aphid (a sucking pest) and the shift to other, more remunerative, crops.

This, it is feared, could force the closure of factories in these areas for want of adequate cane. However, the real dimensions of this problem will be known only when the new cane crushing season begins around October. There are reasons to believe that the situation may not actually be all that bad.

With the monsoon having revived, some belated cane planting is not ruled out now. The recent showers in Maharashtra's sugar belt have generated fresh hopes that the next sugarcane crop, to be planted around September"�October, may be good.

Moreover, sugar prices may firm up further in the festival season, which is round the corner. This will improve the paying capacity of mills, which, in turn, may entice farmers who have switched to other crops to revert to cane cultivation.

That is not to say that one need not be worried about the fate of workers in factories that may fail to begin crushing for various reasons. But these concerns can be addressed in other ways, instead of dishing out a government-sponsored financial package.

In any case, there are doubts over whether state governments will readily accept and implement the proposed package. A couple of sugar packages offered by the previous NDA government went abegging. Though the bulk of the resources for any new package will come from the Centre and the financial institutions, the states have to do their bit, too.

The previous packages remained largely on paper because of the reluctance of states to chip in with their share. Under the circumstances, the Centre would do well to reconsider the move to float yet another sugar package just because Sharad Pawar wants one.