The country’s sugar industry hopes a high-level committee instituted by the government to look into the crucial issue of decontrol in the sector will not become yet another exercise of a recommendatory nature. Its captains are looking forward to prompt implementation of the recommendations in a future report by the panel headed by C Rangarajan, chairman of the Prime Minister’s Economic Advisory Council.
The industry, which estimates sugar production of about 26 million tonnes by the end of the current crushing season and a fall in the 2012-13 season, believes the time is ripe for the government to de-regulate the sector. The players hope that it will be a reality soon.
Officials at the National Federation of Cooperative Sugar Factories (NFCSF) and the Indian Sugar Mills Association (Isma) recall that four committees have so far made comprehensive policy recommendations to decontrol the sector. These bodies were the Sugar Industry Enquiry Commission headed by V Bhargava (1974), another chaired by former food secretary B B Mahajan (1998), one headed by former food secretary S K Tuteja on revitalisation of the sugar industry (2004) and a fourth chaired by the former chairman of National Bank for Agriculture & Rural Development Y S P Thorat on the sugar economy and the way forward (2009). All these panels had sought complete decontrol that could be phased over two to five years.
Thorat recalls that his committee had recommended decontrol in three to five years. “The argument was that the sugar industry had come to a maturity where it could be left to find its own way within a broad regulatory framework,” he told Business Standard. “The time has come for government to withdraw (from the sector).”
Shivajirao Girdhar Patil, an executive board member of NFCSF, hopes the formation of a panel headed by an official in charge of a prime minister’s council will this time prompt the the government to take the “bold” decision of decontrolling the sector.
“I was the member of both the Mahajan and Tuteja committees which called for a complete decontrol. However, the government has yet to take decision (on their recommendations),” he notes. “The current year’s sugar production is believed to be able to meet the country’s demand. So, now is the opportune moment. It is another matter that a fall in output is expected next year.”
According to Isma, the sugar industry should be “totally decontrolled” -- in two or three phases, if need arises. Also, there is an urgent need to remove the levy obligation for the industry and abolition of the monthly regulated release mechanism. Isma further argues that the sugarcane price should be fixed directly linked to the sugar and byproduct prices. The government needs to immediately finalise the price policy of ethanol; and the export policy must be freed to give freedom to generate funds at the right time, according to an Isma official.
He says India is a “unique” case where the central government decides how much sugar each mill can sell every month. “The sugar mills have no controls over their cash flows, they are forced to carry large sugar inventories and borrow huge working capital at 14-16 per cent interest to finance large sugar stocks,” the official notes.
By March every year, he points out, the sugar stocks stuck with mills is worth around Rs 45,000 crore. “This increases the net cost of production of sugar. No other industry in India is subjected to such a control. No other country -- including even the less developed ones like Kenya or Tanzania -- has such an archaic system,” he adds.
DECONTROL SAGA * B B Mahajan committee suggested decontrol from the beginning of the sugar season
* Tuteja panel called for determination of sugarcane price by market forces
* Thorat’s body suggested doing away with sugar release mechanism
* Isma & National Federation sense archaic controls harming the sugar sector’s growth
Chadha, according to I-T sources, is in Dubai at present in connection with a family function.
The searches, which began at 10.30 in the morning, were initiated after the department got inputs regarding alleged tax evasion by companies associated with him, the sources said.
The department, according to the sources, were also looking at the possibility of illegal sale of liquor by certain firms in the run up to the UP Assembly polls.
I-T sleuths also searched the properties of two of his alleged associates — Lalit Kapoor and Gurjeet Kochhar — in Delhi and is expected to question them about certain transactions.
The searches were conducted by the Delhi-based criminal investigation unit of the department and, according to the sources, they were related to the alleged mis-pricing of huge liquor consignments in the state and other places.
Sources said the department conducted the operation after gathering intelligence and other inputs about Chadha and his businesses in the last four months.
Chadha, who runs one of the largest liquor businesses in the state with numerous dealerships, also has business interest in cinema and multiplex sectors.
