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The Economic Advisory Council to the Prime Minister (Chairperson: C. Rangarajan) submitted a ‘Report on the Regulation of Sugar Sector in India: The Way Forward’ on October 5, 2012. The Report examines the issues related to the regulation of the sugar sector, and suggests ways to promote efficiency and investments in the sector. Current regulations in the sugar sector and recommendations 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 installed capacity in the sugar sector to grow at almost 7% annually between 1998-99 to 2011-12 compared to 3.3% annually between 1990-91 to 1997-98. Delicensing also contributed significantly to a structural transformation in the sugar industry. Till 1997-98, sugar cooperatives dominated the sugar industry but by 2011-12 this changed significantly with the private sector contributing the largest share of total installed capacity. Although delicensing removed some regulations in the sugar sector, other regulations persisted. The drivers for regulations were: (i) the highly perishable nature of sugarcane; (ii) the small land holdings of sugarcane farmers; and (iii) the need to keep the price of sugar at reasonably affordable levels while making it available through the Public Distribution System (PDS). However, the Committee found that existing regulations were stunting the growth of the industry and recommended that the sector be deregulated. 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. The principal aspects regulated in the sugar sector, the issues that arise due to such regulations, and the Committee’s recommendations, are as follows:
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Thursday 27 June 2013
Source : prsindia.org
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