Thousands of farmers turned out in a protest march to the parliament on Thursday demanding higher sugarcane prices, leading to the postponement of the opening of the winter session of parliament.
Normal life in parts of the capital was disrupted by the protests, which received support from opposition parties.
The Congress-led government had raised hopes of quick reforms when it assumed power, but progress on the promises has been slow largely due to its rural support base which is hardly pro-reform. The protests on Thursday served to underline the opposition to its reform agenda of rapid change and deregulation.
The government has given the states a degree of autonomy in fixing sugarcane prices, a highly remunerative cash crop, to pave the way for lifting restrictions in a heavily-regulated sector.
However, the move has not gone down well with farmers, who are unhappy the state-set prices that they say benefit sugar firms.
The state government has fixed the price the mills must pay to farmers at Rs165-170 per 100 kg. However, farmers are seeking a higher price that would be in line with the rise in retail prices.
Anil Singh, national secretary of the National Alliance of Farmers'Associations has demanded a price of at least Rs215.
Meanwhile, analysts say sugar ouput in UP is set to fall below estimates with the weakest monsoon in more than 30 years adversely affecting the sucrose content in cane.