Government wields the cane on errant sugar mills

The government had earlier allowed the mills to sell sugar from the dismantled buffer stock of 20 lakh tonnes between May and September this year without having to wait for release orders.

In an order issued on August 13, the show cause notices have been sent to sugar mills, most of which are located in Maharashtra and Uttar Pradesh, the two largest sugar producing states in India.

The move to let mills sell sugar without government release orders was aimed at easing inflationary pressures in an election year. Peeved that the mills have not acted upon its directive, the government has also threatened to take action against them under the Essential Commodities Act.

The government is concerned that sugar prices in select pockets, including Maharashtra, have been on an uptrend despite higher availability vis-à-vis demand of the commodity in the country.

It believes that artificial shortages are behind the firming up of prices and hence has now warned the mills of stringent action if they are not releasing sugar in the market.

The government had not only issued an order allowing mills to sell the dismantled buffer stock of 20 lakh tonne, but also allowed mills to sell 25 per cent of the second lot of the buffer stock of 30 lakh tonne in August and September without release orders.

It had asked the mills to submit monthly reports of their sales in the open market to the Directorate of Sugar.

But most mills across the country failed to comply with the order leading to concerns that hoarding of stocks by the mills is creating inflationary pressure.

No sugary tale this...

•Order was issued on August 13, most of them to the mills located in Maharashtra and Uttar Pradesh, the two largest sugar producing states in India

• The government has also threatened to act against them under the Essential Commodities Act

• Mills have so far not filed their monthly return on sales from the dismantled buffer stock for May-July

... contd.