Sugar industry worried after Pawar's exit

Sharad Pawar’s exit from the food ministry after the Cabinet reshuffle has evoked dismay from the sugar industry. Sugar was the only big and organised industry under Pawar’s administrative control as the food minister.

The industry is clearly worried. “No other politician in the country can understand sugar as well as Pawar,” said a leading sugar producer in the private sector. While this was good for the industry, the proposals initiated by Pawar mostly went through a close scrutiny by his Cabinet colleagues since he is believed to have interests in the sector, said another industry executive.

Proposals by new Food Minister K V Thomas will not raise eyebrows of the Union Cabinet members. “He (Thomas) does not even belong to a sugar producing state. So, he can take objective decisions in the interest of both the producer and the consumer,” said a top miller in Uttar Pradesh.

Pawar had last year expressed a desire to reduce his responsibility, though no action followed. With rising food prices putting pressure on the government and Pawar being blamed for not doing enough, the Prime Minister this time reduced his portfolio.

Under Pawar’s leadership, the domestic sugar output has nearly doubled to around 25 million tonnes (mt) — the estimate for the current season — from 12.69 mt in 2004-05. Domestic output also touched a record high of 28.36 mt in 2006-07. During his tenure, ethanol blending with petrol and power generation from bagasse, a by-product of sugarcane, got a push. He is also responsible for the introduction of a fair and remunerative price set by the Centre of cane. His tenure also saw the first-ever acquisition of a foreign sugar company by an Indian company. Renuka Sugars acquired two companies in Brazil in 2009-10. Almost all the domestic producers expanded their capacities.

The industry is upset that Pawar’s tenure did not see decontrol of the sector. The long pending demand had been gaining some momentum in the second half of last calendar year. Pawar had also made a presentation to the Prime Minister in September last year and he had initiated discussions with the state governments. “We hope the new minister takes forward this unfinished agenda,” said an industry official.

The two major controls on the sugar industry are the monthly release mechanism (under which mills can sell only the quota allocated to them) and the levy sugar obligation (under which the industry has to sell 10 per cent of its produce to the government at subsidised rates for the public distribution system).

source: BS