There have been some recent developments in the sugar sector, which pertain to the pricing of sugarcane and deregulation of the sector. On January 31, the Cabinet approved the fair and remunerative price (FRP) of sugarcane for the 2013-14 season at Rs 210 per quintal, a 23.5% increase from last year’s FRP of Rs 170 per quintal. The FRP of sugarcane is the minimum price set by the centre and is payable by mills to sugarcane farmers throughout the country. However, states can also set a State Advised Price (SAP) that mills would have to pay farmers instead of the FRP. In addition, a recent news report mentioned that the food ministry has decided to seek Cabinet approval to lift controls on sugar, particularly relating to levy sugar and the regulated release of non-levy sugar. The Rangarajan Committee report, published in October 2012, highlighted challenges in the pricing policy for sugarcane. The Committee recommended deregulating the sugar sector with respect to pricing and levy sugar. In this blog, we discuss the current regulations related to the sugar sector and key recommendations for deregulation suggested by the Rangarajan Committee. Current regulations in the sugar sector A major step to liberate the sugar sector from controls was taken in 1998 when the licensing requirement for new sugar mills was abolished. Delicensing caused the sugar sector to grow at almost 7% annually during 1998-99 and 2011-12 compared to 3.3% annually during 1990-91 and 1997-98. Although delicensing removed some regulations in the sector, others still persist. For instance, every designated mill is obligated to purchase sugarcane from farmers within a specified cane reservation area, and conversely, farmers are bound to sell to the mill. Also, the central government has prescribed a minimum radial distance of 15 km between any two sugar mills. However, the Committee found that existing regulations were stunting the growth of the industry and recommended that the sector be deregulated. It was of the opinion that deregulation would enable the industry to leverage the expanding opportunities created by the rising demand of sugar and sugarcane as a source of renewable energy. Rangarajan Committee’s recommendations on deregulation of the sugar sector Price of sugarcane: The central government fixes a minimum price, the FRP that is paid by mills to farmers. States can also intervene in sugarcane pricing with an SAP to strengthen farmer’s interests. States such as Uttar Pradesh and Tamil Nadu have set SAPs for the past few years, which have been higher than FRPs. The Committee recommended that states should not declare an SAP because it imposes an additional cost on mills. Farmers should be paid a uniform FRP. It suggested determining cane prices according to scientifically sound and economically fair principles. The Committee also felt that high SAPs, combined with other controls in the sector, would deter private investment in the sugar industry. Levy sugar: Every sugar mill mandatorily surrenders 10% of its production to the central government at a price lower than the market price – this is known as levy sugar. This enables the central government to get access to low cost sugar stocks for distribution through the Public Distribution System (PDS). At present prices, the centre saves about Rs 3,000 crore on account of this policy, the burden of which is borne by the sugar sector. The Committee recommended doing away with levy sugar. States wanting to provide sugar under PDS would have to procure it directly from the market. Regulated release of non-levy sugar: The central government allows the release of non-levy sugar into the market on a periodic basis. Currently, release orders are given on a quarterly basis. Thus, sugar produced over the four-to-six month sugar season is sold throughout the year by distributing the release of stock evenly across the year. The regulated release of sugar imposes costs directly on mills (and hence indirectly on farmers). Mills can neither take advantage of high prices to sell the maximum possible stock, nor dispose of their stock to raise cash for meeting various obligations. This adversely impacts the ability of mills to pay sugarcane farmers in time. The Committee recommended removing the regulations on release of non-levy sugar to address these problems. Trade policy: The government has set controls on both export and import of sugar that fluctuate depending on the domestic availability, demand and price of sugarcane. As a result, India’s trade in the world trade of sugar is small. Even though India contributes 17% to global sugar production (second largest producer in the world), its share in exports is only 4%. This has been at the cost of considerable instability for the sugar cane industry and its production. The committee recommended removing existing restrictions on trade in sugar and converting them into tariffs. For more details on the committee’s recommendations on deregulating the sugar sector, see here.
The Uttarakhand Assembly concluded a two-day session on November 30, 2022. The session was scheduled to be held over five days. In this post we look at the legislative business that was carried out in the Assembly, and the state of state legislatures.
13 Bills were introduced and passed within two days
As per the Session Agenda, a total of 19 Bills were listed for introduction in the span of two days. 13 of these were listed to be discussed and passed on the second day. These included the Uttarakhand Protection of Freedom of Religion (Amendment) Bill, 2022, University of Petroleum and Energy Studies (Amendment), Bill, 2022, and the Uttarakhand Anti-Littering and Anti-Spitting (Amendment) Bill, 2022.
The Assembly had proposed to discuss and pass each Bill (barring two) within five minutes (see Figure 1). Two Bills were allocated 20 minutes each for discussion and passing - the Haridwar Universities Bill, 2022, and the Public Service (Horizontal Reservation for Women) Bill, 2022. As per news reports, the Assembly passed all 13 Bills within these two days (this excludes the Appropriation Bills). This raises the question on the amount of scrutiny that these Bills were subject to, and the quality of such laws when the legislature intends to pass them within mere minutes.
Figure 1: Excerpt of Uttarakhand Assembly's November 2022 Session Agenda
Law making requires deliberation, scrutiny
Our law-making institutions have several tools at their disposal to ensure that before a law is passed, it has been examined thoroughly on various aspects such as constitutionality, clarity, financial and technical capacity of the state to implement provisions, among others. The Ministry/Department piloting a Bill could share a draft of the Bill for public feedback (pre-legislative scrutiny). While Bills get introduced, members may raise issues on constitutionality of the proposed law. Once introduced, Bills could be sent to legislative committees for greater scrutiny. This allows legislators to deliberate upon individual provisions in depth, understand if there may be constitutional challenges or other issues with any provision. This also allows experts and affected stakeholders to weigh in on the provisions, highlight issues, and help strengthen the law.
However, when Bills are introduced and passed within mere minutes, it barely gives legislators the time to go through the provisions and mull over implications, issues, or ways to improve the law for affected parties. It also raises the question of what the intention of the legislature is when passing laws in a hurry without any discussion. Often, such poorly thought laws are also challenged in Courts.
For instance, the Uttarakhand Assembly passed the Uttarakhand Freedom of Religion (Amendment) Bill, 2022 in this session (five minutes had been allocated for the discussion and passing of the Bill). The 2022 Bill amends the 2018 Act which prohibits forceful religious conversions, and provides that conversion through allurement or marriage will be unlawful. The Bill has provisions such as requiring an additional notice to be sent to the District Magistrate (DM) for a conversion, and that reconversion to one’s immediate previous religion will not be considered a conversion. Some of these provisions seem similar to other laws that were passed by states and have been struck down by or have been challenged in Courts. For example, the Madhya Pradesh High Court while examining the Madhya Pradesh Freedom of Religion Act, 2021 noted that providing a notice to the DM for a conversion of religion violates the right to privacy as the right includes the right to remain silent. It extends that understanding to the right to decide on one’s faith. The Himachal Pradesh Freedom of Religion Act, 2006 exempted people who reconvert to their original religion from giving a public notice of such conversion. The Himachal Pradesh High Court had struck down this provision as discriminatory and violative of the right to equality. The Court also noted that the right to change one’s belief cannot be taken away for maintaining public order.
Uttarakhand MLAs may not have had an opportunity to think about how issues flagged by Courts may be addressed in a law that regulates religious conversions.
Most other state Assemblies also pass Bills without adequate scrutiny
In 2021 44% states passed Bills on the day it was introduced or on the next day. Between January 2018 and September 2022, the Gujarat Assembly introduced 92 Bills (excluding Appropriation Bills). 91 of these were passed in the same day as their introduction. In the 2022 Monsoon Session, the Goa Assembly passed 28 Bills in the span of two days. This is in addition to discussion and voting on budgetary allocation to various government departments.
Figure 2: Time taken by state legislatures to pass Bills in 2021
Note: The chart above does not include Arunachal Pradesh and Sikkim. A Bill is considered passed within a day if it was passed on the day of introduction or on the next day. For states with bicameral legislatures, bills have to be passed in both Houses. This has been taken into account in the above chart for five states having Legislative Councils, except Bihar (information was not available for Council).
Sources: Assembly websites, E-Gazette of various states and Right to Information requests; PRS.
Occasionally, the time actually spent deliberating upon a Bill is lesser than the allocated time. This may be due to disruptions in the House. The Himachal Pradesh Assembly provides data on the time actually spent discussing Bills. For example, in the August 2022 Session, it spent an average of 12 minutes to discuss and pass 10 Bills. However, the Uttarakhand Assembly allocated only five minutes to discuss each Bill in its November 2022 Session. This indicates the lack of intent of certain state legislatures to improve their functioning.
In the case of Parliament, a significant portion of scrutiny is also carried out by the Department Related Standing Committees, even when Parliament is not in session. In the 14th Lok Sabha (LS), 60% of the Bills introduced were sent to Committees for detailed examination, and in the 15th LS, 71% were sent. These figures have reduced recently – in the 16th LS 27% of the Bills were sent to Committees, and so far in the 17th LS, 13% have been sent. However, across states, sending Bills to Committees for detailed examination is often the exception than the norm. In 2021, less than 10% of the Bills were sent to Committees. None of the Bills passed by the Uttarakhand Assembly had been examined by a committee. States that are an exception here include Kerala which has 14 subject Committees, and Bills are regularly sent to these for examination. However, these Committees are headed by their respective Ministers, which reduces the scope of independent scrutiny that may be undertaken.