Rangarajan recommends lifting curbs on sugar sector
Oct 12 2012, 20:49 | By Moneycontrol.com
An expert panel, headed by PMEAC chairman C Rangarajan, has suggested giving freedom to millers to sell sugar in the open market among other recommendations. It has also recommended scrapping state-declared cane prices.
The committee, in a press conference on Friday, has also suggested abolition of levy sugar system, under which mills are required to sell 10 percent of their production to the government to meet ration shops requirement at a cheaper rate. "The levy quota is leading to unnecessary losses to the millers. Our advice to the government is that buy sugar from open market for PDS," Rangarajan told reporters.
The committee has also recommended paying farmers fair and remunerative price (FRP) at time for cane purchase. It says the FRP can be revises on a half-yearly basis and the revenue sharing mechanism should be based on that.
The panel has advocated that sugar manufacturers should distribute 70 percent of the realisation on sugar and by-products to cane farmers. "There is no need for quantitative restrictions on sugar supply," Ragarajan said adding, the panel is advising removing restrictions on by-product use.
The sugar industry is under government control, right from the level of production to distribution. Under regulated release regime, the Food Ministry fixes the quantity of sugar that mills can sell in the open market and ration shops. (Here's how sugar stocks reacted)
In January, the Prime Minister had set up an expert committee, headed by Prime Minister Economic Advisory Council (PMEAC)'s chairman, to examine issues related to decontrolling the sugar sector.
Members of the committee include former Chief Economic Adviser Kaushik Basu and secretaries to the Department of Food and Agriculture.
Sugar output in the 2011-12 season (October-September) was 26 million tonnes, against the annual demand of 22-23 million tonnes.
The latest move to lift controls in the sugar sector follows other recent reform measures such as raising the price of subsidised fuel to cut the budget deficit and opening up of the retail sector to foreign supermarkets by the government.
India is the world's top sugar consumer and biggest producer after Brazil. The country imposes restriction to moderate prices in the domestic markets.
With inputs from agencies
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