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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.
On October 2, 2021, Swachh Bharat Mission (SBM) celebrates its seventh anniversary. It was launched on October 2, 2014 to fulfil the vision of a cleaner India by October 2, 2019. The objective of the Mission was to eliminate open defecation, eradicate manual scavenging, and promote scientific solid waste management. In this blog post, we discuss the sanitation coverage leading up to the launch of the Swachh Bharat Mission and the progress made under this scheme.
Nation-wide sanitation programmes in past
According to the Census, the rural sanitation coverage in India was only 1% in 1981.
The first nationwide programme with a focus on sanitation was the Central Rural Sanitation Programme (CRSP), which was started in 1986 to provide sanitation facilities in rural areas. Later, in 1999, CRSP was restructured and launched as the Total Sanitation Campaign (TSC). While CRSP was a supply-driven infrastructure-oriented programme based on subsidy, TSC was a demand-driven, community-led, project-based programme organised around the district as the unit.
By 2001, only 22% of the rural families had access to toilets. It increased further to 32.7% by 2011. In 2012, TSC was revamped as Nirmal Bharat Abhiyan (NBA) to accelerate the sanitation coverage in rural areas through saturation approach and by enhancing incentives for Individual Household Latrines (IHHL).
In comparison to rural sanitation, fewer programmes were enacted to tackle deficiencies in urban sanitation. In the 1980s, the Integrated Low-Cost Sanitation Scheme provided subsidies for households to build low-cost toilets. Additionally, the National Slum Development Project and its replacement programme, the Valmiki Ambedkar Awas Yojana launched in 2001, were programmes that aimed to construct community toilets for slum populations. In 2008, the National Urban Sanitation Policy (NUSP) was announced to manage human excreta and associated public health and environmental impacts.
On October 2, 2014, the Swachh Bharat Mission was launched with two components: Swachh Bharat Mission (Gramin) and Swachh Bharat Mission (Urban), to focus on rural and urban sanitation, respectively. While the rural component of the Mission is implemented under the Department of Drinking Water and Sanitation, the urban one is implemented by the Ministry of Housing and Urban Affairs. In 2015, the Sub-Group of Chief Ministers on Swachh Bharat Abhiyaan under NITI Aayog had observed that the key difference between SBM and previous programmes was in the efforts to attract more partners to supplement public sector investment towards sanitation.
Swachh Bharat Mission – Gramin (SBM-Gramin)
The Sub-Group of Chief Ministers (2015) had noted that more than half of India’s 25 crore households do not have access to toilets close to places where they live. Notably, during the 2015-19 period, a major portion of expenditure under the Department of Drinking Water and Sanitation was towards SBM-Gramin (see Figure 1).
Figure 1: Expenditure on Swachh Bharat Mission-Gramin during 2014-22
Note: Values for 2020-21 are revised estimates and 2021-22 are budget estimates. Expenditure before 2019-20 were from the erstwhile Ministry of Drinking Water and Sanitation.
Sources: Union Budgets 2014-15 to 2021-22; PRS.
The expenditure towards Swachh Bharat – Gramin saw a steady increase from 2014-15 (Rs 2,841 crore) to 2017-18 (Rs 16,888 crore) and a decrease in the subsequent years. Moreover, during 2015-18, the expenditure of the scheme exceeded the budgeted amount by more than 10%. However, every year since 2018-19, there has been some under-utilisation of the allocated amount.
As per the Department of Drinking Water and Sanitation, 43.8% of the rural households had access to toilets in 2014-15, which increased to 100% in 2019-20 (see Figure 2). However, the 15th Finance Commission (2020) noted that the practice of open defecation is still prevalent, despite access to toilets and highlighted that there is a need to sustain the behavioural change of people for using toilets. The Standing Committee on Rural Development raised a similar concern in 2018, noting that “even a village with 100% household toilets cannot be declared open defecation-free (ODF) till all the inhabitants start using them”. The Standing Committee also raised questions over the construction quality of toilets and observed that the government is counting non-functional toilets, leading to inflated data.
Figure 2: Toilet coverage for rural households
Sources: Dashboard of SBM (Gramin), Ministry of Jal Shakti; PRS.
The 15th Finance Commission also noted that the scheme only provides financial incentives to construct latrines to households below the poverty line (BPL) and selected households above the poverty line. It highlighted that there are considerable exclusion errors in finding BPL households and recommended the universalisation of the scheme to achieve 100% ODF status.
In March 2020, the Department of Drinking Water and Sanitation launched Phase II of SBM-Gramin which will focus on ODF Plus, and will be implemented from 2020-21 to 2024-25 with an outlay of Rs 1.41 lakh crore. ODF Plus includes sustaining the ODF status, and solid and liquid waste management. Specifically, it will ensure that effective solid and liquid waste management is instituted in every Gram Panchayat of the country.
Swachh Bharat Mission – Urban (SBM-Urban)
SBM-Urban aims at making urban India free from open defecation and achieving 100% scientific management of municipal solid waste in 4,000+ towns in the country. One of its targets was the construction of 66 lakh individual household toilets (IHHLs) by October 2, 2019. However, this target was then lowered to 59 lakh IHHLS by 2019. This target was achieved by 2020 (see Table 1).
Table 1: Toilet construction under Swachh Bharat Mission-Urban (as of December 30, 2020)
|
Targets |
Original Target |
Revised Target |
Actual Constructed |
|
Individual Household Latrines |
66,42,000 |
58,99,637 |
62,60,606 |
|
Community and Public Toilets |
5,08,000 |
5,07,587 |
6,15,864 |
Sources: Swachh Bharat Mission Urban - Dashboard; PRS.
Figure 3: Expenditure on Swachh Bharat Mission-Urban during 2014-22 (in Rs crore)
Note: Values for 2020-21 are revised estimates and 2021-22 are budget estimates.
Sources: Union Budget 2014-15 to 2021-22; PRS.
The Standing Committee on Urban Development noted in early 2020 that toilets built under the scheme in areas including East Delhi are of very poor quality, and do not have adequate maintenance. Further, only 1,276 of the 4,320 cities declared to be open defecation free have toilets with water, maintenance, and hygiene. Additionally, it also highlighted in September 2020 that uneven release of funds for solid waste management across states/UTs needs to be corrected to ensure fair implementation of the programme.
The Standing Committee on Urban Development (2021) also expressed concern about the slow pace in achieving targets for source segregation and waste processing. The completion of their targets stood at 78% and 68% respectively of the goal set under SBM-Urban during 2020-21. In addition, other targets related to the door-to-door collection of waste also remained unfulfilled (see Table 2).
Table 2: Waste management under Swachh Bharat Mission-Urban (progress as of December 30, 2020)
|
Targets |
Target |
Progress |
Progress |
|
Door to Door Waste Collection (Wards) |
86,284 |
81,535 (96%) |
83,435 (97%) |
|
Source Segregation (Wards) |
86,284 |
64,730 (75%) |
67,367 (78%) |
|
Waste Processing (in %) |
100% |
65% |
68% |
Sources: Standing Committee on Urban Development (2021); PRS.
In February 2021, the Finance Minister announced in her budget speech that the Urban Swachh Bharat Mission 2.0 will be launched. Urban Swachh Bharat Mission 2.0 will focus on: (i) sludge management, (ii) waste-water treatment, (iii) source segregation of garbage, (iv) reduction in single-use plastics and (v) control of air pollution caused by construction, demolition, and bio-remediation of dumpsites. On October 1, 2021, the Prime Minister launched SBM-Urban 2.0 with the mission to make all our cities ‘Garbage Free’.
