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Wednesday, Sep 18, 2002

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Monthly sugar release system may go soon

Our Bureau

NEW DELHI, Sept. 17

THE Union Minister of Consumer Affairs, Food and Public Distribution, Mr Sharad Yadav, has hinted at the dismantling of the monthly release mechanism for free-sale sugar.

``Effecting complete decontrol and continuation of the monthly release mechanism are contradictory to each other. (Moreover), decontrol of sugar is linked with futures trading. Futures or forward trading in a commodity can only be successful if there are no substantial control on that commodity,'' the Minister said at the 43rd annual general meeting of the National Federation of Cooperative Sugar Factories Ltd (NFCSFL) on Monday.

Mr Yadav was responding to the NFCSFL President, Dr M.R. Desai's, observation that while the Centre's proposal for decontrol of sugar industry was a `pragmatic' step, the current huge stocks position, however, ``requires continuation of release mechanism till futures trading becomes fully operational''.

In other words, it appears that while the industry wants futures trading to precede discontinuation of the monthly release mechanism, the Centre's stance is precisely the opposite: Futures trading cannot take place without the dismantling of the release mechanism!

The Minister said the Centre would ultimately take a decision that ``will be in the interest of the majority of the sugar mills and would be beneficial to the cane growers''.

This is in line with the demand of one of the three companies — Esugar India— which has been given permission by the Government to hold futures trade in sugar. The other two are NCS Infotech, Hyderabad and E-commodities.

EsugarIndia, has actually stalled its plans to go online following the reversal of the Government's stance to monthly release mechanism of sugar.

However, the Indian Sugar Mills Association, the body of private sugar mills, has been categorical about the co-existence of both futures and the release mechanism as it sees the mechanism as an instrument of assured payment to growers.

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