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Category: Current Affairs

The sugar industry in India – preliminary notes

SBP issued a press release on the sugarcane industry yesterday.

This has led to a question regarding the calculations in the media release.

“The market price of molasses is around Rs.7,000 per ton but the UP state government pays mills a no more than Rs.2000 per ton.” But the price you have quoted is the MSP, a price applicable only if the farmers fail to sell their produce in the running season and this is the amount government offers to them as a degree of relief. It is not true that the farmers are forced to sell at this price initially. Even when they fail to sell sugarcane in the running season, there is no force to sell it to the government. It is an offer, which they may take to reduce their losses or decline and suffer the full loss.

Besides, we would like you to furnish some links of credible reports that say that the Uttar Pradesh government is offering Rs 2,000 per tonne for molasses.

My initial response

This matter is rather complex as farmers receive a price for sugarcane, not for molasses. A key leader of SBP made calculations and worked out that the effective price being paid to farmers for the molasses component is well below Rs.2000 per ton.

The issues raised in our press release have been raised here:


“A sugar industry official said the compulsory sales to the liquor manufacturers would result in a distorted market, where price of molasses to liquor manufacturers is one-sixth or 16-17 per cent of open market price.”

and here: http://www.sugaronline.com/website_contents/view/1217071 “But with the state government favoring blatantly the liquor industry,”

The problem is that this is a highly detailed calculation, and all the facts are not available to the outsider (i.e. farmers). There are wheels within wheels in the sugar industry. It is hard to disentangle the mess.

All one can say is that there is no business for the government to be dabbling in administering prices, setting quotas, restricting trade, etc.



Rangarajan Report of 2010: Report of the Committee on the Regulation of Sugar Sector in India: The Way Forward

Parliamentary research blog’s report: http://www.prsindia.org/theprsblog/?tag=frp

Indian sugar policy: Government role in production expansion, and transition from importer to exporter  [this report suggests that farmers are being given higher prices than international prices, to ensure high supply of sugar in India.]

Question in Parliament: http://www.indiansugar.com/PDFS/FRP%20FOR%20SUGARCANE-LS-1754.pdf

Quora question: Why are Indian sugar mills running under a loss? If there is surplus production, why don’t they export it?

Various Problems of Sugar Industry in India

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Jignesh Mevani, Dalits should ask Modi to stop selling cigarettes. In ending socialism lies the solution for the Dalits.

Jignesh Mevani has been detained.

Who is Mevani?

Following the assault on seven Dalits by gau rakshaks in Una taluka of Gir-Somnath district on July 11, Mevani and his friends formed two groups — Dalit Atyachar Ladat Samiti and Rashtriya Dalit Adhikar Manch (RDAM) — to hold protest events and campaign for Dalit empowerment in Gujarat. [Source]

But here’s the issue: “Last Wednesday, at a public event in Vejalpur area of Ahmedabad, he had announced to launch a “rail roko andolan” at different places in Gujarat”

Now, one firmly objects to the attacks on Dalits by gau rakshaks. But the Dalits to use peaceful protests and not disrupt the public.

I cannot comment on the detention since I don’t have the information about what might have prompted it. The police should provide full details immediately. In principle it is wrong to detail citizens without very strong and sufficient cause.

But more importantly, the Dalits need to understand what is going on here: the total breakdown of the law and order machinery of India (not that it was ever functional).

The Dalits should join SBP and demand fundamental reforms. We need to demand Security and Justice for All.

Modi must stop selling cigarettes. He must fund the police and judiciary, and implement fundamental governance reforms outlined in SBP’s manifesto.

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Non-performing loans of public sector banks as a MAJOR vehicle to loot and destory India

A comment received by AV Raju, here. I’ve had to extract it in Word and reformat it, in order to be read it. I am extracting key points below, along with my comments in blue.

This comment by Raju provides a key insight into the role played by public sector banks in the loot of India.


It is reported that the Indian Steel Industry has borrowed to a tune of 4 lac Crores from the Banking System and of this around 75% of it is NPLs. If this is in One sector how about Power, and textiles and infrastructure and real estate?

What is the indebtedness of a common citizen of the country? When would he pay? How did this come about?

Initially there was a factor of irrational exuberance when the lenders were upbeat about the growth of the Steel Industry and that India which is a tiger economy- as opposed to China ( a dragon economy). That the Steel industry is the one that has the potential and visibility to grow manifold considering that the national production is below 80 mn tonnes as against the Chinese production of nearly 700 mn, offering great scope to grow our infrastructure, and consequently our per capita steel consumption, which in 2008 was one of the lowest in the world.

… I am sure the vast majority of the NPLs have been contributed by those Corporates who chose to make their own hay while the sunshine of inaction [during UPA] seemed a very viable alibi. Should not the inaction be brought to justice.

The Bureaucrats have also paid a price and in the broad-brush enquiry many a honest officials and Bank officers are subject to enquiries followed by punitive actions. The Corporates have gone on to grease the new formations and forge alliances with new teams to further their designs to ensure non-payment and to canvass and press for a deep haircut of the existing exposures, citing restructuring of the loans taken by them as the only viable means of coming to terms with the basic economic reality present in the country. Who pays for it?

Consider the case of a small borrower who defaults and goes for a OTS. I have been a banker. In one case the Autorickshaw lent to the borrower under Govt sponsored schemes, originally lent under the pressure of targeted lending, was sold by the borrower within a week of its disbursal and the proceed was used up by him for consumption loan (to perform his sisters marriage).

There was a hue and cry and I roped in the police to have him taught a lesson. But he stood the ground. I felt weak at the protection available to him under the guise of weaker section, humiliated that I am unable to recover public fund entrusted by many pensioners to my care for a nominal interest.

But then, the money, perhaps recapitalised by the Govt later on, has never left the shores. It is the tax payer who has paid for the borrowers sister’s marriage and so be it. It has contributed to economic growth after all.

What about the situation of the national taxpayers wealth being paid to compensate for the wealth that has gone under the carpet never to see the light of the day, converted to assets determined in foreign currencies, never to be used by the nation and ensured to be churning the economy of another nation, even probably an enemy nation. What about the erosion in purchasing power of every individual Indian and the cost being paid by the nation due to depreciation of the rupee. [Sanjeev: this is a very valid point]

It is a huge marriage of illicit interests driven by the sheer ambition of making easy money, with an utter abandon of ethics, principles and patriotism. It is a cumulative effect of all the ambition of all the players in the game of making easy money, with carefully minimised risk of getting legally cornered, while the lenders who are finally to part with the money would be left alone to be tormented by the authorities within and without for not diligently reading the fine prints that purportedly absolve the consultants who are mandated to do an objective job and minimise the risk of failure.

The initial debt and the additional debt later, has been ill-gotten, far in excess of the requirement, for projects that never came up, for capex that never happened and for procuring current assets that better served easy diversion than any addition to enterprise value.

It is a corporate machination of deceit, fraud and treason perpetrated on the common taxpayer with little sense of impunity. This is well achieved by a continual call to litigation by the indebted corporates. The Corporates handed all sorts of stories that blamed the changes in the socio-economy and political scenario … to seek approvals for further leveraging, while promising return of every penny that was ever borrowed.

What is the pain that these economic offenders have caused to the nation? And what is the govt supposed to do in the absence of proper redressal mechanisms and when the Govt is soft pedalling issues, presumably careful not to irritate its own funders and interested parties in the Politics- Industry nexus? [Sanjeev: this is the key point in this article – a very important point]

What is the option left for honest Corporates trying to function in a battered system?…  But there is another option, the most regrettable one though. Stop the business, transport the business beyond the boundaries of the country, grow economy somewhere where the competition is more ethical and level, perhaps using the money pumped in by the practitioners of diversion who are now able to dollarize their rupees. [Sanjeev: this is the other side of the story: kicking out honest Indian businesses out of India]

Now the drama unfolds like this.—The Ruling class needs both the corporates, business houses,and business men for financial support largely to fund elections.

The trio of the politician, the business man and the poor-man ganging up to loot the taxpayer.

All taxes are collected and used to run the Govt, enrich the already rich to syphon monies that would never return to the economy, distributed as doles and subsidies but paid mostly by the common middleclass Indian.

This must stop and I believe there is only the SBP, who has the intellectual mettle, experience of having seen it from close quarters, and most importantly the political as declared in the manifesto to bring this menace to a STOP, as of now.


Comment here: http://www.sabhlokcity.com/2016/09/inviting-you-to-consider-the-vision-and-approach-of-indias-only-liberal-party-letter-from-sanjay-sonawani/#comment-984037

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Corruption in mining in India – $12 million from merely one transaction

Has anyone investigated this in India? This took place in 2008
Documents and key emails suggested that Thiess’ business partner in India would be paying $12 million to powerful Indian government officials – an apparently illegal payment under Australian law. [Source]
Time permitting, I’ll explore further. Any inputs appreciated.
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HC Gupta (IAS 1971 RR, UP cadre) and the Coal Block scam – preliminary analysis #2

A number of people who know HC Gupta have come out in his support. I’m not passing any judgement at this stage, but just noting some of the comments I’ve come across.


My batchmates who know him (and I’m only talking about those whose views I trust) vouch for his integrity.


“Mr Gupta is known across the state for being a humble and an upright official. The fact that he has chosen to go behind bars and not even take legal recourse for lack of funds has pained us immensely and we are trying to help him in as many ways as we can,” a principal secretary of Uttar Pradesh told IANS. [Source]

The officials pointed out that under the Prevention of Corruption Act, there was no watertight case against Mr Gupta, as there was neither intent nor a money trail. “We believe he did what is alleged to have done at the beck and call of the then PMO and he is not involved in the whole issue anyhow,” said a senior bureaucrat, not wishing to be named.  [Source]

Former Coal Secretary H C Gupta, an accused in several coal scam cases and presently out on bail, has been known among his colleagues, subordinates, and batchmates as a clean and studious civil servants who obeyed the orders of his political boss and former Prime Minister Manmohan Singh. It’s a travesty of justice that for doing what he was obligated to do as a civil servant, he has been hauled up in as many as 20 cases [Source]

“this fine bureaucrat, whom everyone unhesitatingly certifies to be “the most honest officer” of his generation” [Source]

IAS officers back ex-coal secy H C Gupta, to approach PM Modi [Source]

(Further: ‘Coalgate’: corruption, an honest bureaucrat and a deeper malaise in India)


Once again, I’m not putting out my own views till I understand this case better. I’ve asked the mining industry to advise me, as well. I may add, that prima facie, HC Gupta appears to be an honest officer.

On the policy matter, though, it is my view that the Supreme Court went overboard (and incorrectly) in their intervention into coal block allocation.

I’ve already posted about this issue (see this: Modi government’s disastrous mining policy for India. Article: Coal block auctions: A Himalayan blunder?)

And my views on Modi’s mining policy are clear: Fundamental design flaws in the Modi government’s mining ordinance

This does NOT mean I’m absolving HC Gupta of wrong doing (e.g. he may have been honest himself – much like Manmohan Singh is personally honest – but may have agreed to do the biddings of political masters whose only goal is to make money; I consider that corruption as well – even though that may not be precisely covered under the Prevention of Corruption Act).

All I’m saying is that this matter needs careful consideration of policy aspects, as well as implementation aspects. The CBI is (as is the Supremet Court) sorely ill-equipped to evaluate the policy aspects involved.


Let me elaborate how politicians actually make money. It is never the case that they make money by directly passing written orders in favour of the person who is going to bribe them. When Hiteswar Saikia asked me (when I was Director, Rural Development Assam) to give a cement contract to a particular private company, he wanted me to make all kinds of written excuses in the file to not give the contract to the lowest bidder. It would then appear that I took the decision, not Saikia. I would not get any money (since I never took any corrupt money) but Saikia would get the money and would be exempt from any direct trail to him.

I was kicked out of my job by Saikia the moment I awarded the cement contract to the lowest bidder (Cement Corporation of India).

But here’s the deal: I’d rather be kicked out and do nothing (while in the IAS) than sign things on behalf of corrupt politicians.

It is NOT good enough to not take money for oneself. Is one doing one’s job honestly? That is the question.

In the case of HC Gupta, that’s still an open question. He may not be culpable under the PC Act, but he may still be guilty of corruption in my broader definition of corruption.

Can those who know Mr HC Gupta confirm that he NEVER violated the ideals of integrity in order to appease any politician? Can he be asked to say so?

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