Ahead of the crucial state assembly elections, is sugar going the onion way? The UPA government thinks it could go that way thereby giving the Opposition parties an issue to cash on. Sugar prices have gone up in the retail market from Rs 16 per kg last year to Rs 22 with no sign of abating. The government is groping in the dark.It does not really know what to do. The accusing finger within the government is being pointed at the Agriculture Ministry. Remaining a mute spectator to the problems of the consumers all these months, the UPA government has suddenly woken up to the potential threat of sugar becoming a poll issue. Agriculture and Consumer Affairs Minister, Sharad Pawar, has difficulty in giving any convincing explanation for the illogical increase in prices. There seems to be a pressure on him now to do something urgently before the government image is further dented for its failure to tackle inflation.
We do not need a machine to check our sugar level! In the sugar season that begins in October, we are going to have production of 12.5 million tonnes. If we add 8.7 million tonnes of the carry-over stocks, we have more than enough to meet the domestic demand of 18.5 million tonnes. The production this season would, of course, be below the last year level of 14 million tonnes because of drought in cane-growing areas. Instead of making a well thought out strategy, the government pressed the panic button. In its anxiety to tackle inflationary expectations, the Commerce and Industry Ministry allowed import of raw sugar under the Advance Licence Scheme. Simply put, it meant allowing imports without paying any customs duty but with export obligation. Instead of helping the price situation, the move to allow imports under the Advance Licence has backfired with the government groping in the dark while the greedy industry and import agencies make a killing.
The policy has not only failed to check the steep rise in sugar prices, but also added to the firming up of international prices sending signals that India is facing severe shortage of the sweetner. There is talk in the industry circles that the firms importing duty-free sweetener would not meet their export obligation on some excuse or the other. Sugar prices have shot up by 45 per cent from Rs 1,300 crore per quintal to Rs 1,900 crore per quintal at the wholesale level. Prices have gone up by 22 per cent in the last six months itself. Price hike has started showing a spiralling impact on inflation.
As a fallout, prices of cola, chocolate, confectioneris, jams, biscuits, etc. are all set to go up. While consumers, including cane-growers, are paying more, there is no gain for farmers. It is only the mill-owners, who, in collusion with the government, are profiteering. When sugar was available in the open market at a rate close to the PDS price throughout the NDA government’s rule, the industry went on making noise about distress sale and their inability to pay farmers for their cane. The mills owe more than Rs 3,000 crore to the cane-growers as arrears. Till last year, they had this alibi of not operating in a viable environment because of excessive production and recessionary market conditions. But now, when they reap rich dividends and the value of their stocks go up many times over the poor cane-growers are still hoping for recovery of their arrears.
It is not with sugar alone.The situation with other food articles—be it rice or wheat—is the same. In fact, there is a suspicion within the government whether the production data in regard to various foodgrains given by the Agriculture Ministry is right. “They talk of rice arrivals in the market but then prices should come down,” said a senior Congress leader.