New Delhi, May 2: Just two days after the government decided to free cotton exports, a high-level group headed by Prime Minister Manmohan Singh today decided to abolish the quota system for sugar and free its exports by bringing it under the Open General Licence scheme.
Apart from removing quantitative restrictions on shipment of the sweetener “up to a particular level of export”, the group that met to arrive at a consensus on trade policies, also decided to scrap the minimum export price (MEP) on onion, thereby freeing its exports.
Both steps are being considered a positive move toward decontrol of the two commodities, which will benefit millers and in turn the farmers. However, there is also a perception that the decisions may end up largely benefiting the “biggies” having the capacity to take benefit of the shifting export policy. It may also have a detrimental effect on the already skyrocketing commodity prices back home, they feel.
“Basically, Sharad Pawar has had his way,” an official later said.
The meeting had been called after Agriculture Minister Sharad Pawar wrote to the Prime Minister objecting to the export policies concerning agriculture items such as sugar, cotton and dairy products. Apart from the PM and Pawar, the meeting was also attended by Finance Minister Pranab Mukherjee, Commerce and Textiles Ministers Anand Sharma and Food Minister KV Thomas.
Irked by curbs on milk, cotton and sugar exports, Pawar had last month shot off a letter to the PM stating that the government’s policies were hurting farmers. He said the “negative approach” of the Food Department in sugar exports had led to heavy losses in export earnings, which could have been used to clear arrears of cane farmers.
Meanwhile, the government decided to constitute a committee, headed by Prime Minister’s Economic Advisory Council (PMEAC) Chairman C Rangarajan, for formulating policy on how to handle surplus foodgrain in government godowns.
The Food Ministry had wanted some extra allocations under the PDS for BPL and APL groups to offload the overflowing godowns of the country and create more storage space for new crops before the monsoon. Thomas has worked out a plan to distribute 14.5 MT of foodgrains to ration card holders and offload another 2.5 MT in the open market. Out of 14.5 MT for ration card holders, the ministry proposed distribution of 8 MT of additional foodgrains to BPL families and 6.5 MT to APL families.
The decision on sugar is a major move. Its export has been a contentious issue as even after having surplus production and international demand, the export hit a roadblock in the absence of a clear policy.
On March 26, the empowered group of ministers (eGoM) on food had decided to allow 1 MT of sugar export, but the decision had not been notified in the absence of export modalities. The panel of ministers had directed the ministry to come up with a new policy to expedite exports.
For the two million tonnes of sugar exports, which has so far been allowed to in the 2011-12 marketing year, the food ministry was allocating the export quota among millers on the basis of average production of last three years.