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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.
As of May 5, Assam has 43 confirmed cases of COVID-19. Of these, 32 have been cured, and 1 person has died. In this blog, we summarise some key decisions taken by the Government of Assam until May 5 for containing the spread of the pandemic in the state.
Movement Restrictions
For containing the spread of COVID-19 in the state, the Government of Assam took the following measures for restricting the movement of people in the state. On March 19, the Department of Health and Family Welfare issued an order for closure of all museums, libraries, coaching centers among others until March 31.
Lockdown: To further restrict the movement of individuals, in order to contain the spread of the disease, the state government enforced a state-wide lockdown from March 24 to March 31. The lockdown involved: (i) sealing the state borders, (ii) suspension of public transport services, (iii) closure of all commercial establishments, offices, and factories, and (iv) banning the congregation of more than five people at any public place. Establishments providing essential goods and services were excluded from the lockdown restrictions. Limited rituals were allowed in places of worship without any community participation.
This was followed by a nation-wide lockdown enforced by the central government between March 25 and April 14, now extended till May 18. Starting from May 4, based on the Ministry of Home Affairs guidelines, the state government has allowed certain activities with restrictions in green zones of the state. Activities such as e-commerce for all commodities, construction activities in urban areas, functioning of government and private offices among others are being allowed in green zones.
Health Measures
The Assam COVID-19 regulations, 2020: On March 18, the government issued the Assam COVID-19 regulations, 2020. These regulations are valid for one year. Key features of the regulations are as follows:
All government and private hospitals should have separate corners for the screening of COVID patients. Further, they should record the travel history of such persons during screening,
No hospital can refuse the treatment of suspected/ confirmed COVID-19 cases,
People travelled through affected areas must voluntarily report to the authorities, and
District administration can take necessary measures to contain the spread of COVID-19, such as (i) sealing a geographical area, (ii) restricting the movement of vehicles and people, and (iii) initiating active and passive surveillance of COVID-19 cases.
The Assam COVID-19 Containment Regulations, 2020: On March 21, the government issued the Assam COVID-19 Containment Regulations, 2020. These regulations detail the measures to be taken in case of community transmission within a geographical area. These include enhanced active surveillance, testing of all suspected cases, isolation of cases and home quarantine of contacts, among others.
Guidelines to Airports: On March 18, the government issued instructions regarding procedures to be followed at the airports for the screening of passengers. The guidelines allocate responsibilities such as thermal screening of passengers, counselling, transportation of passengers among others to various teams at the airports.
Medical colleges and Hospitals: On March 23, the Department of Health and Family Welfare directed all medical colleges and district hospitals to set up isolation wards. On March 27, the Department of Health and Family Welfare released measures to be followed in medical colleges and hospitals. These include: (i) seven days of training on critical care to all doctors, nurses, final year students of bachelor programs and Postgraduate students, (ii) Principals should set up a core team in every college for managing COVID-19 patients, among others.
Welfare measures
Food distribution: On March 28, the government decided to provide gratuitous relief such as rice, pulses among others to all wage earners, slum dwellers, rickshaw pullers, homeless, and migrant labourers living in municipal towns for seven days.
Minor Forest Produce (MFP): For enhancing the income of tribal farmers, the government revised rates of 10 MFPs such as honey, hill broom and added 26 new MFPs for Minimum support price in the state.
One-time financial assistance for persons stranded outside India: On March 22, the government announced one-time financial assistance of $2,000 to residents of Assam stranded in foreign countries. People who went abroad 30 days before the stoppage of international flights (on March 22) and are unable to return will receive this financial assistance.
Administrative measures
On March 21, the government constituted the task force at the State level and District level for implementation of various measures for containment of COVID-19 in the state.
On April 2, the government constituted a committee for monitoring and checking of fake news across all forms of media.
On April 29, the Department of Finance announced certain austerity measures in the context of the fiscal situation that arose due to COVID-19. These include suspension of MLA area development funds from April to July 2020, reduction in establishment expenditure, and a ban on the purchase of vehicles by the government (except ambulances and for policy duty).
For more information on the spread of COVID-19, and the central and state government response to the pandemic, please see here.
