Mahajan panel for decontrol of sugar industry

The Mahajan committee was set up in March 1997 following a directive from the Allahabad High Court on a petition challenging state governments’ powers to advise sugar mills on cane price payable to growers.

The committee suggests specifying an annual export quota of 1 million tonne to better prepare the industry. “This would help the industry plan for the future by exploring markets, entering into agreements and setting up additional capacity,” said Mahajan.

S L Jain, director generalof Indian Sugar Mills Association, was ecstatic about the report. “This is the best report on sugar ever produced and once accepted, it would put sugar economy on an even keel. It would enable maximum exploitation of our resources,” he said.

The 17-member committee, with representatives from the sugar industry, cooperatives and some states has said that in view of large-scale leakages of levy sugar into the open market, a big chunk of subsidy being availed of by the non-poor and the small amount of relief that PDS provided to card holders, the Government should stop sugar sales through PDS.

“The poor consumers in the rural areas are in fact net losers as they consume mainly gur/jaggery whose prices move in tandem with the price of free-sale sugar and would therefore be higher than they would be under a system of complete decontrol,” the report says.

Mahajan said that if the government wanted to continue selling sugar through the PDS, it should buy it from the industry. The subsidy given by thegovernment on sugar could be extended to other foodgrains.

Giving reasons for decontrol of the industry, the panel report noted that the present system of partial control pushes up market prices of free-sale sugar. It, however, recommended continuation of government controls over sugar release to contain market volatility and ensure adequate supplies at affordable prices.

Among other recommendations of the panel was the setting up of a sugarcane pricing board comprising an economist as chairman. It also recommended the existing system of cane area reservation binding farmers of an area to a particular mill.