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While this may ostensibly make good business sense, experts
say that there are many problems with this decision.
Firstly, the decision to export all available
estimated surpluses leaves no margin for error.
Secondly, once sugar is exported, importing shortfall
quantities may be more expensive as India has the
cheapest sugar at retail price Rs. 20 per kilogram
(kg) compared to Rs. 27 per kg. Thirdly, experts
suspect that Government’s optimism in ensuring
stability in prices when the increase in production is
only marginally high at 2% and there is a record low
across-the-board opening agricultural stock. Fourthly,
with the international prices creeping up due to cost
of inputs, especially oil that has collateral effect
on price, sugar prices in India are held lower at Rs.
20 per kg only because of increased release of reserve
stocks.
Therefore, analysts believe that with the internationally induced
pressure on price as well as artificial supply choke
by errant mills, it will be impossible for the
Government to manage these low prices. The biggest
loser will then be the poor and the economy—sugar
has a high weight in the artificially low inflation
rate that is quote by the Government. A collateral
impact will be higher interest rates to head off
runaway inflation blocking economic growth. Experts
question whether the marginal gain achieved by the
relief to the temporary surplus that the country
enjoys is worth the long-term risk to the
economy.
The Food and Agriculture Ministry has already
stumbled on wheat stock management and poor management
of the bird flu virus epidemic.
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