The Hindu Business Line : ‘Decontrol on schedule’

There will be no going back on the decision to decontrol the sugar industry from the new season, beginning October 1, despite the recent firming up of prices.

“The note, recommending dismantling of the 10 per cent levy imposed on mills along with the monthly release mechanism regulating the balance 90 per cent free sale quota, has already been sent for Cabinet approval. There is no rethink on the proposal, to be effective from the 2008-09 sugar season (October-September),” a Food Ministry official said.

However, in order to ensure that decontrol would not lead to upward pressure on prices, the Government may consider options such as directing mills to offload a certain percentage of their stocks in the market.

“In case of any abnormal increase in prices, we can retain the power to force mills to release, say five per cent of stocks held by them at any point, into the market. This will automatically discourage any tendency towards hoarding,” the official added.

He, however, ruled out the possibility of the Government creating a strategic reserve of sugar, which would facilitate market intervention. “It is impractical and costly, as we would incur around Rs 180 as interest, insurance and storage charges on every tonne.

Also, where do we store this sugar — in the mills’ godowns or that of the Food Corporation of India, for which we will then have to procure separately from the market?,” he quipped. –

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