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EDITORIAL |
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THE
MENACE OF ADHOC STATE ADVISED SUGARCANE
PRICES AND MORE Over
the years, adhoc sugarcane pricing has become a tool at the hands of
senior politicians, particularly, the Chief Ministers of the concerned
States to meet political
ends, irrespective of its adverse consequences on all concerned with the
sugar sector including sugarcane farmers themselves, who, in fact,
suffer the most, contrary to the general perception. Such situations
recur frequently; and yet this practice continues. The
happenings in the sugarcane crushing season 2006-07 when the sugarcane
farmers suffered the most, is still fresh in the memory of those
concerned with the sugar sector including administrators of sugar
industry in the Union Government. The
sugar industry falls exclusively under the domain of the Central
Government, having been
included in entry 52 of the Constitution of India, providing for the
control of industries by the Union of India
in public
interest. Subsequently, Industries Development and Regulation Act was
passed by the Parliament in the year 1951 and the sugar industry, among
others, was included in the scheduled industries under the domain of the
Central Government. Later in 1955, the Essential Commodities Act was
enacted by Parliament and under this Act too both sugar and sugarcane
were included as
Essential Commodities. By virtue of
these enactments, the Central Government have assumed full power
for fixation of price of sugarcane payable by vacuum pan sugar
factories. Besides
the initial fixation of the minimum price for sugarcane, the Central
Government has also made provision for payment of additional price for
sugarcane by way of equitable sharing of extra realisation on sale of
sugar. The
Central Government have also assumed power to regulate distribution and
movement of sugarcane by providing for reservation of cane area for a
sugar factory having regard to the availability of sugarcane in the said
reserved area. The
basic theme is to ensure adequate availability of sugarcane to the sugar
factories by way of purchasing
sugarcane from such area. This particular power was subsequently
delegated to the State Governments on practical considerations. Thus,
the State Governments have been exercising this power on behalf of the
Central Government. During
periods of excessive cultivation of sugarcane the sugar mills have to
extend their cane crushing operations into the hot months to clear the
farmer fields. Few
State Governments, have
been fixing sugarcane price on
an adhoc basis at levels much higher than those fixed by the
Central Government, generally known as State advised prices. The Supreme
Court of India, in a case between the sugar industry in various States
vis-a-vis the respective State Governments, by a majority judgment
(3:2), decided that the State Governments too have the power to fix
price of sugarcane mainly on the ground
that the State Governments were playing an important
role in
organising sugarcane supplies to the factories. This is the single logic
based on which the majority judgment has been pronounced, declaring that
the State Governments too have a legal right to fix sugarcane price. Pursuant
to the aforesaid judgment, the appellants have been seeking review of
the aforesaid judgment as in their view, the said judgment stood on a
reasoning which hardly existed. For, as mentioned, reservation of cane
area for any sugar factory is under the exclusive domain of the Central
Government and this power is being exercised by the State Governments
only as a delegated power. It appears that this significant issue has
escaped attention. For, whatever action being taken by the State
Governments, was only on behalf of the Central Government and such
action cannot go to the credit of the State Governments. Eversince
the above judgment has been delivered a
chaotic situation has come to prevail. The State Governments
emboldened by the above judgment have been persistently interfering and
increasing the sugarcane prices payable by the sugar industry on
extraneous considerations. But, there has been no remedy to such an
adhoc fixation of sugarcane price. The State of U.P. which is the
largest producer of sugarcane and second largest producer of sugar has
been in the limelight
for fixation of higher sugarcane price year after year. In fact
pursuant to the Supreme Court Judgment the U.P. Government deleted the
single provision
for constitution
of a
Sugarcane Board to
recommend to the State Government on various matters including sugarcane
prices. By virtue of deletion of the said
provision complete
laissez-faire has
come to prevail and State advised sugarcane prices are being fixed year
after year on the sweet will of the Chief Minister, U.P. Adhoc
large increases in the prices of sugarcane caused huge losses to the
sugar factories during the year 2006-07 with the steep decline in sugar
prices due to excessive production of sugarcane and sugar. Thus a very
inimical situation had come to prevail and large arrears of sugarcane
price accumulated. While this problem was created mainly by the action
of the U.P. Government, the central Government could not remain a silent
spectator. Considering
the sufferance of millions of sugarcane farmers
due to large arrears of sugarcane prices, the Central Government
provided support to minimise the cane price arrears. For the
first time, the Central Government agreed to provide interest free loan
corresponding to the notional excise duty paid/payable after
a period of two years, refundable over a period of next 2 years
in equal monthly installments.
Besides this, the Central Government also extended WTO consistent
support to promote sugar exports, besides creation of buffer stocks of
sugar to bring about some stability in sugar prices. Even so, at the
time of writing this Editorial, arrears of 2006-07 season’s sugarcane
price continue in the State of U.P. Such a disastrous situation
naturally provoked the
sugar industry to yet again seek legal intervention. Cases were filed in
the High Courts of U.P. in Allahabad as well as in Lucknow. Various
legal pronouncements have been made. In some cases, High Court has
quashed the order of the State Government fixing the cane price. In some
other cases, on appeal,
such orders were stayed. The legal battle is on. Perhaps, a final solution will emerge only when the matter, now pending is finally concluded by the Supreme Court. ************ |