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Sugar sparks Cong-NCP clash

india Updated: Aug 28, 2009 01:38 IST

First it was drought. Now, it’s sugar.

The Congress’ attempt to pin blame for rising sugar prices and the handling of drought on the Nationalist Congress Party (NCP) has irked Sharad Pawar’s party so much that the bitterness already generated over seat-sharing for the Assembly elections is now threatening to break their decade-old alliance.

The percentage of increase in sugar prices is the highest in 28 years (up to Rs 40 per kg in the retail market), and with the festival season having begun and Navratri, Diwali and Id still to come, they are expected to soar further.

A jittery Congress is pointing fingers at the NCP chief.

Earlier this week, Congress leaders expressed unhappiness over the handling of drought relief by the Union Food and Civil Supplies Ministry headed by Pawar. On Wednesday, Congress leader Satyavrat Chaturvedi again attacked Pawar over drought relief and sugar prices. In Maharashtra, Congress leader Kanhaiyalal Gidwani, too, blamed Pawar for the situation on Thursday.

He criticised Pawar over a proposed amendment in the Centre’s sugar policy. “Outrageous amendments are being sought to be made in the sugar policies to benefit some manufacturers,” he said in a letter sent to Prime Minister Manmohan Singh.

This criticism comes in the wake of a tussle between the two parties over seat-sharing for the polls due in October.

Following its impressive show in the recent Lok Sabha elections, where it won 17 out of 48 seats, the Congress wants more Assembly seats than it had contested in 2004 and is not willing to offer more than 100-110 seats to its alliance partner.

Chief Minister Ashok Chavan told the party leadership in New Delhi on Thursday that the alliance with NCP was necessary for Congress to remain in power in the state. Sources said the Congress leadership is inclined to accept Chavan’s line of argument.

However, a section of Congress leaders is pushing for a hard bargain with NCP.

The NCP, for its part, is not ready to settle for anything less than 124 seats that it contested in the last Assembly polls. Maharashtra has 288 Assembly seats.

In order to keep a back-up plan ready, the NCP has already sought applications from aspiring candidates in all 288 seats.

Some party leaders, led by Deputy Chief Minister Chhagan Bhujbal, is insisting that the party should contest separately if the Congress is not ready to maintain status quo in the alliance.

Low prices led farmers to move away from planting crop

Sugar farmers in Maharashtra decided to go easy on sugar plantation in 2008 after sugar prices nose-dived by around 25 per cent. Exactly a year later, men like Sharad Pawar sitting in New Delhi, are feeling the pinch.

Maharashtra, which produces a third of the country’s sugar, is now suffering from short supply, leading to increase in sugar prices by around 35 per cent.

Maharashtra and Uttar Pradesh together contribute nearly 60 per cent of the country’s sugar output.

Low prices, along with a bumper crop in 2007 and 2008, led farmers to move away from cultivating the crop in 2009, leading to a dip in sugar production from 2.6 metric tonne in 2008 to 1.6 metric tonne in 2009.

The state’s sugar output this year halved to 46 lakh tonne from 91 lakh tonne last year.

“It is basically due to bad monsoon and crop failures that production has been affected,” Principal Secretary Cooperative and Marketing S.K. Goyal said.

Under the government regulation system, sugar producing cooperatives have to sell 10 per cent of their total production as levy sugar, which is sold at government-decided rates in the public distribution system (PDS). The balance crop can be sold in the open market.

However, sugar mills can only sell 11 per cent of their total stock every month in the free market.

In an attempt to bring more sugar into PDS, the Centre now wants to increase the percentage of levy sugar to 25 per cent.

While sugar companies are willing to toe this line, they want the sugar release mechanism dismantled. This would mean that the sugar companies would have the right to decide how much sugar is released in the free market.

Meanwhile, the state government is selling sugar at Rs 20 a kg in PDS shops as against the market price of Rs 32 a kg. “Considering the hike in sugar price, the government will make available 2 kg sugar at Rs 20 per kg for BPL cardholders from September 1 through PDS,” said Co-operation Minister Harshvardhan Patil.