Sugar mill owners on Thursday appealed to the government to immediately accept the recommendations of the Rangarajan panel to do away with the10 per cent levy obligation on them and the regulated release mechanism for free-sale sugar. The committee has also suggested total decontrol of the industry.
The Indian Sugar Mills Association (ISMA) and the National Federation of Cooperative Sugar Mills (NFCSM) said unshackling the industry would help bring investment into the sector and achieve an annual growth of 15 to 20 per cent in the next five years, doubling the industry size to Rs. 1,60,000 crore. Higher investment is required to meet the rising demand which is estimated to be around 32 million tonnes by 2020 against 22.5 million tonnes at present.
Without committing themselves on whether the move will bring down retail sugar prices which are ruling around Rs. 42 a kg in the Delhi markets, the millers quoted the Rangarajan panel as saying that decontrol would bring down prices and benefit farmers as well. They indicated that the additional availability of the 10 per cent levy sugar in the market might have some impact on prices.
Under the release mechanism, the Centre sets the sugar quota each mill can sell in the open market. Through the levy system, mills are obliged to sell 10 per cent of their production to the government at subsidised rates for sale to the poor through the public distribution system. The subsidy on this count, the industry representatives said, was around Rs. 3000 crore in a year at the current prices.
However, on the recommendation of the committee to link cane prices to mill revenues, both the ISMA and the NFCSF said this aspect of decontrol required further discussions with farmers’ groups, State governments and other stakeholders to arrive at a “fair and transparent price mechanism.”
“We welcome all recommendations made by the Rangarajan panel. It is high time that the sugar sector is liberalised. We want the levy sugar system and regulated release mechanism be done away [with] at the earliest possible,” ISMA president Gautam Goel said at a press conference here. “The government may purchase its PDS requirement from the open market as recommended by the panel,” he said.
On apprehensions about decontrol leading to cartelisation, ISMA Director-General Abhinash Verma pointed out that the controls on the industry had not reduced volatility in the market.
“It is not possible to cartelise because of the fragmented nature of the sector. There are more than 400 mills across the country. Allowing market forces is better and efficient way to determine prices than government control.”
While Mr. Goel said there had been no growth in the industry in the last five years, NFCSM Managing Director Vinay Kumar lamented that there was a negative growth in the cooperative sector.
“Our objective is to produce more sugar than our consumption and that India should have a fair share in the export market,” Mr. Goel said, adding that “for this, adequate and timely payment to farmers is the key.”