Sugar prices may further crash by Rs 1,000 to Rs 2,000 per tonne following the government decision not to allocate any free-sale quota to mills having court orders, trade sources said here.

In a bid to make sugar release mechanism more "effective", the government has barred one-third of the country’s 450 mills, including 43 co-operatives run by MPs, from releasing the commodity in the market for the next quarter even as industry described the move as "vindictive".

The decision comes shortly after the cabinet cleared placing of sugar release mechanism in the Ninth Schedule of the Constitution to make it non-justiciable.

"Those mills which used court orders to download additional sugar in the market over and above the allocated quota and have not furnished proof of using the realisations made for cane price payment, their release quotas for next quarter have been withheld," official sources said.

"If these over 150 mills are continued to be barred from the normal quota, this may force them to sale their entire stocks in panic and bring down the market further," they pointed out. Thus, it may be a penalty for the mills abiding by the release mechanism and continue to hold huge unsold stocks.

Actually the court orders against the release mechanism were initially obtained  by some of the leading mills in the private sector and the co-operatives and other mills had followed up when they found that mills with court orders were able to dispose of their stocks at higher prices.

Official sources said the idea is to discipline those mills which have flouted the release mechanism under which government fixes the quantum each mill downloads in the market every month.

Of the 150 mills, 63 are in Maharashtra alone, in all 43 are run by MPs, around 100 are co-operative mills and 28 are from private sector in Uttar Pradesh. Mills, however, are not convinced of the official logic and owner of one such factory said it is an act of "vindictiveness and vengeance and with court orders in their favour will not be of much consequence".

He said, in fact, the government action is an affront to the judiciary which had permitted the mills to download additional sugar in the market.

Industry officials said at a time when government has tabled a bill in Parliament to put release mechanism under the Ninth Schedule of the Constitution to make it non-justiciable, such a move will be "counter-productive".

TIMES NEWS NETWORK[ TUESDAY, APRIL 01, 2003 01:35:49 AM ]