C.Rangarajan Committee (2012) on sugarcane pricing:
- The Chairman of the committee of Economic Advisory Council to the Prime Minister led by C. Rangarajan submitted a Report on “The Regulation of Sugar Sector in India: The Way Forward” on October 5, 2012.
- The Report examines the issues related to the regulation of the sugar sector and suggests ways to promote efficiency and investments in the sector.
- It focuses on the various aspects such as:
- Cane reservation area and bonding
- Minimum distance criterion
- Price of sugarcane
- Levy sugar obligation
- Regulated release of non-levy sugar
- Trade policy for sugar
- Regulations relating to by-products, etc.
- The report highlighted challenges in the pricing policy for sugarcane as sugar is one of the most controlled industries in India.
- These recommendations are in line with the industry’s demand for easing controls.
- This is not the first committee set up by the government to study reforms in the sugar industry. Recommendations of the Tuteja Committee and Thorat Committee are yet to be seen.
Highlights of the report of the committee:
- The Committee recommended deregulating the sugar sector with respect to pricing and levy sugar.
- The report pitches for a stable trade policy and a moderate duty on imports and exports but wants outright ban or quantitative restrictions done away with.
- Even though India contributes 17 per cent to the global sugar output, its share in exports is only four per cent.
- Export and import policy should not be guided by domestic availability.
- The committee suggested the removal of the concept of a minimum distance of 15 km between any two sugar mills, obligating a mill to buy cane from growers within the reservation area.
- The mills must enter into contracts with farmers. This would help to phase out the cane reservation area and bonding.
- The State Administered Price (SAP) of sugar cane set by the States should be done away with, in favour of the Fair and Remunerative Price (FRP) set by the Centre as the minimum.
- Mills must share 70 per cent of the value of sugar and each by-product, including bagasse, molasses and press-mud (ex-mill), as cane dues payable to farmers for supplies.
- The payment to farmers will be made in two steps: the first, the minimum FRP set by the Centre; and the second, subsequent to the publication of half-yearly ex-mill prices.
- The system of levy sugar should be done away with.
- The States that wanted to provide sugar under the TPDS might procure from the open market through competitive bidding, and also fix the issue price.
- It also asked the government to rationalise the current issue price for TPDS sugar.
- The prices of by-products should be market-determined with no earmarked end-use allocations.
- The committee has also recommended doing away of the state’s power to reserve sugarcane area for mills, implying farmers can sell to any sugar mill they wish.
Main recommendations made by the committee:
- Removal of levy sugar obligation from industry
- Abolishing the regulated release mechanism for sugar sales
- Export – Import policy — no quantity and time restrictions
- Rationalisation of cane pricing policy
- Linkage of cane price to value realised from sugar & by-products
- phasing out cane area reservation
- Dispensing with “minimum distance criteria” between mills
- Removal Of controls on molasses & free up power sales
- Removal of jute packing restrictions on sugar