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Sugar sector controls to be ended shortly

India will move soon to remove all controls on the sugar industry, President K R Narayanan told Parliament on Monday while outlining government policy.

India, sitting on an 11-million-tonne sugar stockpile, began easing controls on the industry last year to boost exports.

"The sugar industry, which has already begun to benefit from delicensing, will also be fully decontrolled soon," Narayanan told parliament on the opening day of the budget session.

India has already reduced the sugar quota which mills are required to supply to the government at reduced rates to 15 per cent from 30 per cent.

The government has also allowed futures trading in sugar. But prices of sugar cane continue to be set by both national and state governments.

India has approved three exchanges for futures trading to be set up in different parts of the country since sugar factories were spread out.

Narayanan said for the first time sugar mills have been allowed to supply ethanol, to be mixed with petrol and diesel, up to five per cent.

"This will not only result in savings in our oil imports, but also add to the commercial viability of our sugar mills," he said.

Narayanan said grains output in 2001-02 (July-June) is projected to touch a new high of 210 million tonnes, from 196 million tonnes in the previous year.

India is trying hard to cut its grain stocks, built after successive good monsoons, which are expected to touch 75 million tonnes by April.

"The government proposes to respond to the new situation with several measures to free Indian agriculture from shackles of the past," Narayanan said.

Analysts and traders say India's Budget for the next fiscal year, to be presented in parliament on February 28, will press ahead with farm sector reforms.

They say reforms in the sector were key to ensuring long term economic growth as more than two thirds of India's population of more than a billion people live off agriculture and related activities.

Earlier this month, government removed restrictions on the movement and storage of grains and edible oils and allowed free exports of wheat.

Narayanan said the government also plans to formulate a comprehensive strategy to check losses and wastage of agriculture commodities that occur during production, transportation and distribution. These losses are estimated at Rs 700 billion a year.

Reuters

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