SYLLABUS SECTION: GS III (ECONOMY)

WHY IN THE NEWS?

Recently, the center put the brakes on sugar export curbs.
Exports of sugar banned the shipments of, Unlike wheat.
Exports of the sweetener allow with only specific permission from the 1st June effect.
From the Directorate of Sugar in the Ministry of Consumer Affairs, Food, and Public Distribution.

CURBS PUT UP ON THE SUGAR EXPORTS

Until now The Sugar export curbs were free, they were allowed in unlimited quantities without any government permission.

India is expected to produce a record 355lt, in the 2021-22 sugar year.
With 85lt of opening stocks, the total available sugar is more than the estimated domestic consumption of 270lt.
Even after exports of 100lt, the end-year stocks of 70lt will suffice for over three months’ consumption.
Before, the start of each season, the Centre has announced an export target and also a subsidy on this.
In the current 2021-22 season, millers have contracted export orders for 90lt of which over 70lt have already been sent out.
In the current sugar season, international sugar prices continue to be bullish.
Exports have helped India reduce its sugar stock and ensured millers pay their farmers on time.

· India is the second-largest sugar producer, after Brazil.

· Brazil has always led in terms of exports, but over the last few seasons produced more ethanol than sugar.

National Policy on Biofuels 2018, approving the advancing of the target of blending 20% ethanol in petrol by five years to 2025-26 from 2030.

· A drought in other sugar-producing nations such as Thailand, helped India venture into countries that otherwise were dependent on Brazilian sugar.

A possible worry may be the low stocks at the beginning of the next season, which could lead to supply constraints.
The sugar season picks up momentum only after December.
The current season for India can be called unique given the bumper production the country has seen.
Of the 521 mills that had taken season, 116 are still operating (the season will end in the second week of June for most of the country.)
India’s domestic consumption is pegged at 260lt.
Retail prices can see inflation if the October opening stock is anything lesser than 65-70lt.
It will make more of the surplus sweetener available for domestic ethanol-making, for which the country has set new fuel-blending targets and is a top government priority.

Till 31st October 2022 or until further orders Sugar mills and traders who have specific permissions from the government will only be able to export sugar (including raw, refined, and white sugar)
The restriction is not applicable for exports to the European Union and the United States.

This decision will have a moderating influence on price pressures in the economy.
The worry is that inflation has become entrenched and is likely to remain above the RBI’s medium-term inflation target of 2-6%.