The Hindu Business Line : Changes in sugar sale quota in the offing

THE Government is set to extend the validity period of the 15 lakh tonne free sale quota (FSQ) sugar released to mills during the current month for an additional 15 days till July 15. The move is part of the `package' for the sugar industry that is being worked out at the behest of the Union Food and Agriculture Minister, Mr Sharad Pawar.

For April and May, the Government had made FSQ releases of 14 lakh tonnes and 16 lakh tonnes. This was followed by the release of another 15 lakh tonnes for June. It is being argued that the 15 lakh tonnes FSQ for the current month is somewhat excess. "One can understand this volume of releases made in April and May, which are the real summer months when sugar demand, too, generally goes up. There is no need for making large-scale releases in June since many parts of the country would be receiving monsoon rains," officials said.

Keeping this in view, mills have been permitted to utilise their FSQ allocations for June over a 45-day period till July 15. Simultaneously, it has been decided in-principle that from the July-September quarter onwards, mill-wise FSQ releases would be made by a Committee, which, apart from senior officials in the Ministry, would also include representatives from the Indian Sugar Mills Association and the National Federation of Cooperative Sugar Factories Ltd.

There is also a talk doing the rounds that in the future allocation of FSQ, mills in the southern and western region would be given lower quotas than the releases made to mills in the north and the east. The apparent logic for this is that ex-factory realisations in the north and the east are usually about Rs 200 per quintal higher than in the southern and western regions. Rationalising quota allocations would help in bringing down the existing differences in mill-wise realisations.

The other major decision taken at a high-level meeting of Ministry officials and industry representatives convened by Mr Pawar last Friday pertained to the problem of States not lifting levy sugar from mills. It is being proposed that in case levy sugar is not lifted for a period of up to 60 days, mills would be given the freedom to convert the `unlifted' quantity to free sale sugar, which they will then be permitted to release over a six months period.

Mr Pawar is understood to have also instructed that payments owed to mills against their buffer stock claims (about Rs 125 crore) and export subsidy (Rs 119 crore) be cleared within the next 45 days. Also, there is a suggestion that monies from the Sugar Development Fund (SDF) be made available to the industry at 200 basis points below the interest rates charged by commercial. This is taking into account the fact that the SDF is financed through a Rs 14 per quintal cess levied on sugar, which is supposed to be ploughed back for modernisation of mills and cane yield improvement programmes.