PM sets up committee to study decontrol of sugar

Prime minister Manmohan Singh has constituted an expert committee under the chairmanship of C. Rangarajan, chief of the Economic Advisory Council to the PM, to examine issues relating to the deregulation of the sugar sector.

Other members of the committee include Kaushik Basu, chief economic adviser in the finance ministry; noted economist Ashok Gulati; former bureaucrat Nand Kumar, besides secretaries of the departments of food and public distribution and agriculture.

The committee, which has been empowered to involve experts and academics as special invitees, has been asked to complete its task as early as possible and give its recommendations.

Rangarajan, a former governor of the Reserve Bank of India, had earlier urged Singh to go for a major overhaul in the sugar sector, instead of opting for piecemeal changes.

Though India is the world's second-largest producer – and largest consumer – of the sweetener, the sugar industry is tightly controlled by the government. It fixes the price at which sugar factories buy sugarcane from farmers, the quantity of sugar that can be sold in the market (after allocating 10 per cent of the production to the government at a controlled price for public distribution) and arbitrarily imposes restrictions on its imports and exports.

For the industry, the 2011-12 season (which is from October to September) is proving to be good, with production expected to touch 24.5 million tonnes. Demand is slightly lower at 21.5 million tonnes.