States must lift curbs on molasses trade: C Rangarajan

BANGALORE: Prime Minister's Economic Advisory Council Chairman C Rangarajan today said in order to decontrol sugar, state governments should take decision to lift curbs on trade in molasses as it falls under their jurisdiction.

"The state governments should take decision to lift curbs on trade in molasses as it falls under their purview of powers. The central government cannot act on its own," he told reporters on the margins of an event organised by sugar mill owners here.

It is given to understand that wily politicians use control to make the sugar industry heavily subsidise the liquor business. They impose controls on trade in molasses which is used for making spirits and force sugar companies to sell a percentage of their molasses production to alcohol makers.

All these controls mean that the cost of alcohol is reduced after the molasses are sold at distress rates during the peak sugar crushing season, when stocks have to be shed quickly.

If the state governments thinks that this is the most appropriate way to benefit farmers, they should follow the recommendations, Rangarajan said.

Asked how the state governments could be convinced to implement this recommendation, Rangarajan said he has not arrived at a fair view, however they should rethink their stand on it.

Asked whether a directive could be issued to oil marketing companies to float tenders, Rangarajan said it all depends upon the price at which ethanol is available and how profitable it is for these companies.

"Therefore there is some cut off point at which ethanol may not become a viable medium for blending, but I think the oil marketing companies have given the authority now to float the tender. They should do it," he said.