Weeks after an announcement to decontrol petrol, the government today hinted at a possible decontrol of the sugar sector, where output is set to rise. The statement, made here by Union Agriculture Minister Sharad Pawar, sent sugar stocks soaring.
“Industry bodies have written to us that this is the time when the government should consider (on decontrolling the sector). We are discussing and assessing the entire situation,” Pawar said on the sidelines of a conference.
He said the government will have an estimate of sugarcane planting and sugar output in 2010-11 by the first week of September. The sugar season runs from October to September. “Based on the assessment, we will take a final decision (on decontrolling sugar sector) and recommend to the Cabinet,” he said.
Asked whether the ministry would propose full decontrol or a phased one, he said, “One thing is for sure, the right to fix the support price of cane for farmers will definitely be with the government.” Earlier addressing the conference, Pawar noted the sugar sector was the only industry under government control and said this was a right time to withdraw controls, as output during the next crop year would be on the higher side and prices would be reasonable.
The domestic sugar cycle is likely to move from a situation of deficit to surplus. Against a five-year-low output of 14.5 million tonnes in the 2008-09 season, the output in 2009-10 is estimated at close to 18.4 mt. Industry projection for 2010-11 output is 23-24 mt, equivalent to annual domestic consumption.
| UPSWING Price in Rs on BSE | |||
| Company | July 8 | July 9 | % Change |
| Empee Sugars | 49.75 | 53.80 | 8.14 |
| KCP Sugar &Inds. | 19.05 | 20.30 | 6.56 |
| Dhampur Sugar | 60.80 | 64.25 | 5.67 |
| Bajaj Hindusthan | 115.65 | 121.25 | 4.84 |
| Balrampur Chini | 83.90 | 87.15 | 3.87 |
| Bajaj Hind Sugar | 21.95 | 22.65 | 3.19 |
| Sh Renuka Sugars | 69.00 | 71.15 | 3.12 |
| Compiled by Business Standard Research Bureau | |||
Sugar is one of the most controlled industries in India. Attempts to decontrol sugar were made in 1971-72 and again in 1978-79, only to be rolled back. Over the years, controls were eased on major industries such as steel and cement, but not here. The Union government dictates the portion to be released by each sugar mill for the government’s ration shops (currently 20 per cent), the price in this regard, and how much of the rest may be sold in each month.
A penalty is levied if a mill does not sell the given quota within the stipulated month. There are other controls on the purchase and sale of sugarcane.
