The Political Economy of Indian Sugar

Sugar is produced by joint stock mills, both public or purely state-owned and private, the private mills comprising big business houses as well as the cooperative sugar mills, today the largest sector within the industry but with most of the capital invested by governmental and semi-governmental agencies. The sugar economy is one of the most regulated sectors- in addition to a variety of duties and subsidies, the state speciJies the price at which mills buy cane, the levy-sugar price, the price at which almost half the output issold on the 'free market', the monthly releases onto the open market, the wages paid to the worker, the rate of return on sugar and its by-products, and so on. However, the sugar cycle persists, despite controls. This paper analyses the price-output relationships in the market for sugar and the sugar mill industry, with specific reference to the long gestation period of sugarcane crop, and the competition from the non-organized processing sector (namely, gur and khandsari). The technical, locational and ownership characteristics of the sugar industry and the nature of the pressures that come to bear upon the state while formulating its sugar policy are highlighted.