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LATEST NEWS UPDATES | Sugar free

Sugar free

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published Published on Jan 15, 2010   modified Modified on Jan 15, 2010


Nobody in government should be surprised that sugar is selling at nearly Rs 50 a kg, possibly the highest it has reached in history. The supply-side causes have been visible for months. Last year’s patchy monsoon, of course, had an effect on the size of the domestic sugarcane crop; and, meanwhile, across the world in Brazil, extra-heavy rain has hit its production. Consequently, traders worldwide have been gearing up for a shortage; futures prices had gone through the roof. What is shocking, therefore, is how government in India, both at the Central and the state levels, waited till the crisis had actually hit before moving, leisurely, to fix it.

Because this is no normal, supply-driven crisis. Sugar is globally produced, and two local failures, even if in the world’s largest producers, should not have caused Indian prices to go up so precipitously. No, the most unacceptable facet of the fact that state response was so dilatory was that the problem is caused by state control in the first place. This is on almost-farcical display right now as Uttar Pradesh and the Centre blame each other for the price rise. UP said the Centre’s “bullishness” was to blame, and that it favoured mill owners; Delhi said that UP had given in to farmers’ pressure following their demonstrations last November and halted the processing of imported sugar, meaning that, since then, eight lakh tonnes of raw sugar had been sitting at various ports of entry, waiting for various government agencies to sort their act out. Of course, the (Central) customs and excise department’s rules prevented the sugar mills in UP that had originally imported this sugar from getting anyone else to process it, either. (This was hastily undone by the cabinet on Wednesday.)

This is the sort of bureaucratic and political manoeuvring that is endemic to the sugar industry in India. At the local level, political cartels and district strongmen dominate production and milling. Further up, there’s a strange divide: while the Centre frames policies on sugar, state governments do so for sugarcane. Unsurprisingly, politics trumps basic economic good sense at every point. There’s only one way out: finish the reform process. Let farmers sell their produce to whoever wants it, let mills buy raw material from anywhere. Government “protection” has been shown to be a sham. Let’s shove the politics out, or we will keep on getting hit by 50-rupee sugar.


The Indian Express, 15 January, 2010, http://www.indianexpress.com/news/sugar-free/567597/
 

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