After four decades, the government is moving towards deregulation of the sugar industry, which means no dual price of sugar at controlled price and in free market.

A first step in that direction has been taken by the Prime Minister by setting up an expert panel headed by his economic advisory council (EAC) chairman Dr C Rangarajan, a former Reserve Bank of India (RBI), to examine all issues relating to the sugar sector.

"The Committee will look into all the issues relating to deregulation of the sugar sector and it has been requested to complete its task as early as possible and give its recommendations to the Prime Minister," an official announcement said.

Though its terms of reference have not been fixed, sources said the panel would also examine the sugarcane growers' constant complaint of delayed payments of their products and harassment by the sugar mills.

Those included on the panel are Dr Kaushik Basu, chief economic adviser of the Finance Ministry, Commission for Agriculture Costs and Prices (CACP) chief Dr Ashok Gulati, Nand Kumar, former food secretary and currently member of National Disaster Management Authority, secretaries, food and agriculture, and EAC secretary K P Krishnan as its convener. The panel is empowered to involve such experts, academics as required as special invitees.

PTI reports

Prime Minister Manmohan Singh on Friday constituted an expert committee, headed by his Economic Advisory Council Chairman C Rangarajan, to examine issues related to decontrol of the sugar sector.

Earlier this month, the representatives of the apex sugar industry bodies ISMA and NFCSF had met Finance Minister Pranab Mukherjee, seeking partial decontrol of the sector, including freedom to sell sugar in the open market and doing away with the levy obligation for Public Distribution System.

"The committee would look into all the issues relating to de-regulation of the sugar sector and it has been requested to complete its task as early as possible and give its recommendations to the Prime Minister," a statement issued by PMO said.

The other members of the committee include Kaushik Basu, Chief Economic Adviser, Ministry of Finance, and secretaries to the Department of Food and Agriculture.

Other members of the panel are: Commission for Agricultural Costs and Prices (CACP) Chairman Ashok Gulati, former Agriculture Secretary Nand Kumar and K P Krishnan, Secretary EAC Convener.

"The Committee has been empowered to involve such experts, academics as required as special invitees," the statement said, adding that the Food Ministry would provide the necessary support to the committee in discharging its functions.

The statement did not state any deadline for the committee to submit the report. .

The sugar industry is under government control, right from the level of production to distribution.

Under the levy obligation, sugar mills are required to sell 10 per cent of their output to the government at below-cost rates for supply to ration shops.

Mills supply levy sugar at 60 per cent of the cost of production, resulting in an annual industry loss of about Rs 2,500-3,000 crore.

Industry has also been demanding removal of the monthly release system under which food ministry allocates quantity of sugar to be sold in the open market every month.