The government on Monday imposed stock-holding limits for six months on large sugar buyers. Those who buy at least 1,000 kg will now be able to keep stocks for 15 days.
“It came to the notice of the Central government that some bulk consumers, consuming sugar as a raw material, have started stockpiling sugar in anticipation of further increase in prices of sugar in the market,” a government statement said.
With imports suffering due to high international prices and demand set to go up as the winter-onset festival season nears, a crisis looms large. Elections are due to be held in October in three states of Maharashtra, Haryana and Arunachal Pradesh and spiralling prices could spark voter fury.
Prices in four major cities — Delhi, Mumbai, Kolkata and Chennai — have surged between 47 and 52 per cent over the last year. For a low-income household, a 10 per cent increase in sugar price results in a little less than 1 per cent increase in the monthly food expense, according to an AC Nielsen-KPMG analysis.
According government data, in the first week of August, sugar prices in Delhi jumped 47.4 per cent over the last year. In Mumbai, it shot up by 35 per cent and in Kolkata by 64 per cent. In Chennai, it has soared 52.9 per cent.
India does not produce enough sugar to meet domestic demand, about 23 million tonnes, but consumed the highest in the world.
“Production in the current sugar season has declined from 26.3 million tonnes to about 15 million tonnes as against the domestic requirement of 22.5-23 million tonnes, which has put pressure on sugar prices,” Agriculture Minister Sharad Pawar had told a food ministers’ conference last week.
While speaking to HT, sugar manufacturers, too, put the blame on the government: its stop-gap policies, low statutory price for cane farmers and an irrational dual-price mechanism that requires sugar to go through a maze of controls. However, government officials blamed it on hoarding.
To boost stocks, the Centre has extended its scheme to allow duty-free raw sugar imports until March 2010 and white sugar imports up to November 2009.