BS has reported as follows:
To mollify political rivals and farmer lobbies, the Centre today swiftly moved to “remove the misgivings” in the Sugarcane (Control) Order, making it clear that the difference between the fair and remunerative price (FRP) and state-advised price (SAP) would have to be paid by the mills and not by state governments.
At an all-party meeting, Finance Minister Pranab Mukherjee said Section 3 (B) of the Order would be scrapped. The Centre would also change the preamble of the proposed Bill (which will replace the Ordinance) to relieve states from any financial burden arising out of higher SAP.
“It was not the intention of the food ministry to dump the additional burden of higher SAP on states. But the language of the Ordinance created some confusion. It will be changed to make it clear that even if the states declare higher prices for sugarcane, the mills will have to pay the additional amount,” said Mukherjee.
The Centre will continue to fix the price of the levy sugar on the basis of its FRP. The new Bill replacing the Ordinance is likely to be brought on Monday, sources in the prime minister’s office said.
Earlier, the government was planning to call an all-party meeting next week over this issue. But Prime Minister Manmohan Singh wanted to see the issue resolved before he left for the US on Saturday. The United Progressive Alliance (UPA) managers hurriedly convened the meeting this afternoon where all parties supported Centre’s new proposal.
“It is strange phenomenon that the government should have to pay Rs 14,000 crore to the mills. So, the Centre decided to bring in the Ordinance. But, now, we will have to make some changes to the Sugarcane (Control) Order to bring clarity in the whole issue,” Law Minister Veerappa Moily told reporters after the all-party meeting. “UPA wishes to reaffirm it has always been guided by the principles that the interest of farmers is paramount. In taking this decision also, UPA has kept the interest of farmers as paramount,” the statement said after the all-party meeting.
The Left parties and the BJP, however, raised apprehensions in the meeting that the Centre’s fresh move would resolve the problem only for the time being. “As the Centre says it will buy levy sugar on the basis of FRP, the mill owners might again go to the court and create problems,” CPI(M) leader in the Lok Sabha, Basudeb Acharia, said. While mills were not sure whether the decision to continue fixing a uniform levy sugar price can be challenged after the new changes, they are certainly upset about it. “We have been robbed off of our rightful claims,” said a top Uttar Pradesh miller.
In the meeting, the finance minister mooted the new proposal. Food Minister Sharad Pawar also briefly explained the reasons behind bringing the Ordinance. The meeting was attended by all major political parties. Rashtriya Lok Dal (RLD) leader Ajit Singh, who played a crucial role in unifying the Opposition parties against the Ordinance, was also present in the meeting.
The new Ordinance, promulgated last month, introduced FRP as a uniform price at which mills will procure sugarcane. Besides introducing FRP, the new Ordinance now required state governments to pay the difference over and above FRP.
It is back to square one for sugar manufacturers. The Centre and State Govt will force them to pay higher prices to the growers thus squeezing their margins. Sugar Shares look to be in for a slide in prices, the higher sugar prices notwithstanding.
In my opinion d new policy favours mills.Now they wl pay SAP OF Rs 165-175 against demand of Rs 280 by farmers.Again now govt wl b forced to pay levy price on SAP basis and not on FMP basis as per Supreme court order.So sugar stocks wl jump when d real picture is dawn on all.This is how politicians play their game fooling public.They hv also spread d news that imported sugar wl cost Rs 45-50/kg thereby allowing mills to raise price.
| NIFTY 
