Lucknow: The winds of privatisation that had blown over Uttar Pradesh's sugar industry, the country's second-largest sugar producing state, during Mayawati government's rule, have been put to test with the present Akhilesh Yadav government deciding to conduct an inquiry into the sale of 21 sugar mills that were hived off during the previous BSP regime.

During a meeting of the state cabinet chaired by chief minister Akhilesh Yadav on Tuesday, a decision was taken to conduct an inquiry into the sale of UPSSCL sugar mills by Lokayukta.

The Mayawati government's four-year-old painstaking disinvestment exercise in the sugar sector finally got buyers for 10 operative factories and 11 closed units of of UP Sugar Corporation mills. But immediately after the sell off, the matter landed in political muck, with opposition parties alleging that the BSP had sold off the mills for a song. Alleging huge corruption in under-evaluating the mills and then selling all the four mills to handpicked buyers, the Congress had said that the sale amount was far less than what could have been retrieved through the sale of scrap.

Talking to FE, a senior official of the state government said privatisation in the sugar sector was an important decicion of the Mayawati government as it set on the path of fiscal correction. “The sugar sector in UP is politically volatile and sensitive sector, due to which the state government, in its overzealousness, ends up paying extra than any other state every year. It bled the state exchequer most and it was unanimously decided that it should be passed on to the private sector.

“Every year, the state exchequer ended up with a loss of almost R700 crores due to sugarcane pricing. UP is probably the only state that pays sugarcane farmers high rates. Apart from sugar pricing, the fact that many of the sugar mills, both of the State Sugar Corporation and co-operative sector were old and loss-making and faced the problem of overstaffing, added to the fact that they incurred huge losses on the state. A total loss of over R850 crore was incurred by the sugar sector alone every year,” revealed the official.

In fact, even the Supreme Court had given its go ahead for the disinvestment process when the bidding process of the operational sugar units in the state was challenged.

Lokayukta had earlier turned down a complaint from farmer leader VM Singh for probing the sale on the ground that the Uttar Pradesh Lokayukta Act does not permit him to probe the decision of the state cabinet or the CM who presides over the cabinet. “The UP Lokayukta Act does not have it in its ambit to probe public servants including the CM and the state cabinet,” Uttat Pradesh Lokayukta, NK Mehrotra had said then.