No proposal to completely decontrol sugar sector: Govt

Prime Minister Manmohan Singh in September, 2010, had already made it clear that the issue of sugar decontrol would hinge on the approval of the state governments. Last year, the government had started working on a proposal to decontrol the sugar sector taking confidence from the bullish sugar production forecast for the current year.

"We have discussed (the issue of sugar decontrol) with states. Unfortunately, many states like Uttar Pradesh, Punjab and Karnataka are not ready," Agriculture Minister Sharad Pawar had said last month after he shed his food portfolio.

The food ministry had then proposed doing away with controls like monthly sugar quota that mills can sell in the open market and through ration shops.

"If only three-four states accept, it is difficult to implement. And Prime Minister had always told that for this kind of policy, states should be taken into the confidence," Pawar had pointed out.

Asked if the government will put the proposal of decontrolling the sector on the backburner, Pawar had said, "You can't say for now. If there is more production and prices come down, they (states) may rethink and accept (it) also".

In August 2010, Pawar had said that the time had come to decontrol the sector, as sugar production in 2010-11 season was expected to be higher than the annual domestic demand and prices had softened from nearly Rs 50 a kg in January 2010.

At present, the sugar industry is under government control, right from the level of production to distribution. Besides, a fixed monthly sales quota for sugar mills, the factories are required to sell 10 per cent of their output to the government at cheaper rates for supply to consumers via ration shops.

However, the ministry has held that it would continue to fix the fair and remunerative price (FRP) of sugarcane, which is the minimum rate that mills are required to pay to farmers.

Sugar production of India, the world's second largest producer and biggest consumer, is estimated to rise to 24.5 million tonnes in 2010-11 (October-September) from 19 million tonnes in the previous year. The domestic demand is pegged at 22 million tonnes.