While other sectors of the economy have been freed over the years, the sugar sector continues to be under government control, right from production to distribution.
The Centre fixes the sugar quota to be sold in the open market and, for ration shops supply, forces mills to sell 10 per cent of their production (known as levy sugar) at lower than the market price.
The Committee, headed by the Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan, submitted its report to the Prime Minister.
Releasing the report, Rangarajan said: "There is a whole gamut of regulations related to the sugar sector. We have looked at all of them and have made key recommendations.
"Levy sugar obligation and administrative control on non- levy sugar need to be dispensed with immediately."
He added that this will free the industry from burden of the government's welfare programme.
Instead, the panel suggested that state governments should buy sugar directly from the open market for ration shops and sell the same at price determined by them. It also said that the Centre should give Rs 3,000 crore subsidy to the States to bear procurement expenses.
Rangarajan made it clear that the removal of these two controls would not affect domestic prices, but rather improve the financial health of sugar mills, thereby timely payment of cane arrears to farmers.
In order to prevent piling up of cane arrears, the panel suggested retaining two major controls but with minor changes.
It suggested that the government continue with fixing of fair and remunerative price (FRP) of sugarcane and also make it mandatory to mills to share 70 per cent of revenue from sugar and other by-products to farmers. MORE
