The Hindu : National : Panel for abolition of free-sale sugar release mechanism

Online edition of India's National Newspaper
Friday, Dec 03, 2004

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National

Panel for abolition of free-sale sugar release mechanism

By Our Special Correspondent

NEW DELHI, DEC. 2. The Tuteja Committee for Restructuring of Sugar Industry has recommended that the Government withdraw itself from the release mechanism for free-sale sugar. From October 1, 2005 the de-regulated sugar industry should itself decide the free sale sugar quota for each month. Fulfilment of this long-standing demand of the industry will expose consumers to the pulls and pressures of the market forces.

While retaining the present system of 10 per cent of the production being collected for levy sugar, the committee recommended that the present arrangement of payment to sugarcane growers of the statutory minimum price (SMP) be continued along with benefits of price sharing with sugarcane farmers as per the Sugarcane Control Order 1978. It has suggested that the minimum radial distance between an existing and new sugar factory be raised to 25 km rather than 15 km at present. However, the panel has not gone into the issue of State Advised Price (SAP) on sugarcane.

The Food and Agriculture Minister, Sharad Pawar, received the report here today from the Chairman of the Committee and Food Secretary, S.K. Tuteja.

In case of shortages, the committee recommended that imports of raw sugar be allowed with the Indian Sugar Exim Corporation playing an important role in import and export of sugar.

Later speaking to presspersons, Mr. Tuteja said the sugar output this year was expected to be between 125 to 130 lakh tonnes, but with a carry over stock of about 85 lakh tonnes, the availability was comfortable. The country's annual consumption is around 180 lakh tonnes. On cane arrears, he said that Rs. 580 crores was due till 2003-04.

`Defer loans'

One of the major recommendations of the committee is that all loans availed of by the sugar mills (as on March 31, 2004) might be deferred or rescheduled to long-term loans payable in 10 to 12 years, besides giving a moratorium on both interest and principal for three years from 2004-2005.

NABARD and RBI should work out the exact terms of the package in consultation with State Governments.

The committee suggested that the Governments of drought/flood affected States go for additional open market borrowings to help sugar factories meet the fixed costs and 75 per cent entitled wages (of 2004-05 and 2005-06 season and arrears of 2003-04 season) of mills which were operational in 2002-03 sugar season but may have to remain closed in 2004-05 and 2005-06 sugar seasons due to non-availability of sugarcane. The State Governments could offer this as loan to sugar factories at a rate of interest of 4 per cent per annum.

Subsidised interest rate

The report said that working capital to cooperative sugar factories be made available through the National Cooperative Development Corporation (NCDC) at a subsidised rate of interest. For this, NCDC may arrange cheaper funds through External Commercial Borrowings and the Centre may accord permission and provide guarantee for this.

A body such as the Bureau for Industrial and Financial Reconstruction (BIFR) may be set up for cooperative sugar mills with NCDC as the nodal agency for working out rehabilitation packages for sick mills.

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