Sugar industry in Tamil Nadu has welcomed the Rangarajan Committee report on decontrol of the sugar sector submitted last week.

The committee headed by Dr C. Rangarajan Chairman Economic Advisory Council to the Prime Minister, submitted its report last Wednesday to the Prime Minister Dr Manmohan Singh.

The report makes far-reaching recommendations on sugarcane pricing, doing away with controls such as levy obligation for sugar mills, which entails them to supply 10 per cent of their sugar production to the public distribution system at less than market price, stopping regulated release of sugar, which is a market intervention to regulate sugar price and phasing out of the command area concept which links farmers to specific mills.

The industry has widely welcomed the recommendations relating to freeing up of sugar including levy and regulated release but has its reservations on discontinuing the sugarcane command area concept.

Linking sugarcane areas to specific mills has contributed to a sustained relationship between mills and farmers and committed mills to invest in enhancing production and productivity in their command areas. It also underpins crop loan disbursement in which banks lend to farmers and the mills deduct the loan amount and pay the banks from the sugarcane price.

‘Fairly tempered’

Dr M. Manickam, President, South Indian Sugar Mills Association – Tamil Nadu, said the report is beneficial for the industry as it addresses issues comprehensively. It is ‘fairly tempered’ in balancing the interests of the stakeholders. The Union Government needs to implement the recommendations particularly referring to the decontrol of sugar – “It is bound to be implemented,” he felt.

However, the industry is not for dismantling the command area concept. “It is not a good idea in the long-term,” he said.

Ram V. Tyagarajan, Chairman and Managing Director, Thiru Arooran Sugars, welcomed the recommendations. The industry has long awaited the reforms. He hoped the Government accepts the recommendations and acts on it, he said.

‘Welcome provisions’

N. Ramanathan, Managing Director, Ponni Sugars, and immediate past president SISMA, said recommendations relating to sugarcane pricing providing for about 70 per cent of the cost of sugar and by products, abolition of levy sugar and regulated release of sugar into the market were welcome provisions.

The report primarily advocates a free market, which will be beneficial in the long-term.

Sugar industry representatives hoped that the Centre implements the recommendations fast. While there have been a number of committees that have advocated the decontrol and deregulation of the industry, the Government has not acted on these recommendations over the last two decades.

balaji.ar@thehindu.co.in

(This article was published on October 14, 2012)
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