Though the government feels the move would boost to economic liberalisation, sugar barons in the State see it as the first step towards systematic dismantling of sugar co-operatives in Maharashtra.

Chief Minister Manohar Joshi while describing the delicensing as ``a good step'' feared that the decision could have adverse effects on the co-operatives. He said that sugar co-operatives should be allowed to flourish in the event of liberalising the sugar industry as it forms an important segment of the State's economy. His government was contemplating on whether some provisions could be amended to safeguard the interest of the co-operatives, he said today.

``Some risky decisions are necessary. Populist measures will not solve the problems of the State,'' he said, adding that the government was preparing a comprehensive policy on the financial assistance to sugar co-operatives.

Although not part of the food security system of the country, the sugar industry has for long enjoyed special protection at the hands of governments -- at the Centre and in the states. The industry is neither a core industry nor a major foreign exchange earner and yet even during the first flush of liberalisation in 1992-93 and 1993-94, the policy-makers dared not propose any fundamental change in the conspicuously politics-driven industry. The sugar economy represents a varied confluence of interests -- cane cultivators, the sugar industry and its offshoots such as distilleries and alcohol-based units.

Those in favour of complete delicensing and later decontrolling of the sugar industry argue that the industry is part of the market for commercial commodities and not that of the country's foodgrain economy. Hence there should be no harm in putting the industry under the discipline of market reforms.

However, opponents of the move argue that the relevance of co-operatives should not be judged by economic parameters alone and should be seen in its social perspective. In case of Maharashtra, the co-operative movement has played a pivotal role in transforming the rural topography of the State, they argue.