The Commission for Agricultural Costs and Prices (CACP) has suggested for introducing dual pricing of sugar
for commercial and domestic consumers.
CACP suggestion for benefit of the sector
➢ This suggestion is unlikely to resolve the recurring financial woes of the sector so its problems are
primarily the consequence of policy limitations and want of reforms.
➢ In any case, mere tampering with sugar pricing cannot ensure economic stability for the sugar
industry unless the output prices and the input costs are correlated.
Current status of the industry:
➢ Currently, the sugar industry is having a good run for several reasons.
➢ Exports have turned feasible, because of the government subsidy and a spike in international prices.
➢ Realisations from domestic sales of sugar and its by-products, notably ethanol, have also improved.
➢ The burdensome inventories have shrunk with many mills having already got rid of their surplus
➢ The government has offered a series of bailout measures and fiscal sops.
➢ These include lucrative prices for ethanol; creation of sugar buffer stock; and soft loans to the
industry with a hefty 7% interest subvention.
➢ The unpaid dues to the farmers continue to remain a worrying issue.
➢ Besides, the sugar sector is notorious for its cyclic ups and downs.
➢ In the National Policy on Bio-fuels 2018, the government has allowed the use of B grade molasses
and sugarcane juice as feed stocks to increase availability of ethanol.
➢ This recent policy modification is set to encourage the cultivation of sugarcane, a water-guzzling
crop, exclusively for alcohol making.
➢ India, a water-stressed country can ill-afford this.
➢ The ecological damage from increased cane farming may be higher than the benefits of using ethanol
as transport fuel.
Steps to be taken:
➢ Instead of further complicating the matters through dual pricing, digging up the 2012 Rangarajan
committee report on sugar would be far better.
➢ The practical pricing system mooted by the committee should be implemented.
➢ The proposed benefit sharing formula envisages assigning 70% of the revenue earned by sugar m ills
from the sale of sugar and its by-products to the cane growers.
➢ The objective is to link the prices of sugarcane with those of sugar and its by-products.
➢ This would, in turn, allow the output of both sugarcane and sugar to be determined by market
dynamics and stave off scarcities and gluts.
➢ It would also safeguard the interests of all stakeholders - cane farmers, sugar industry, traders and