The CCEA’s decision was based on the recommendation of the Rangarajan committee report submitted in October last year
The government on Thursday gave sugar mills freedom to sell the sweetener in the open market and unburdened them from the obligation of supplying the commodity at subsidised rates for ration shop—a decision that will help the industry save about Rs3,000 crore annually.
The government maintained that the decision will not lead to any rise in retail prices of sugar. However, it would double the government’s subsidy burden to Rs5,300 crore annually from about Rs2,600 crore. The decision to partially decontrol sugar sector, the only industry left under the government control, was taken by the Cabinet Committee on Economic Affairs (CCEA).
“The regulated release mechanism may be dispensed with immediately. Obligation of levy on sugar mills be done away with for sugar produced after September 2012,” food minister KV Thomas told reporters after the meeting.
Under the regulated release mechanism, the Centre fixes the sugar quota that can be sold in open market. Of late, this mechanism has been relaxed and the quota is now being released on half-yearly basis from the earlier monthly-wise.
In levy sugar system, millers are required to contribute 10% of their output to the Centre for running ration shops at cheaper rate, costing industry Rs3,000 crore a year.
Thomas further said the requirement of sugar for ration shops may be procured by states through the open market through a transparent system. “The Government of India will bear the difference between the ex-mill price of Rs32 per kg and retail sugar price of PDS at Rs13.50 per kg,” Thomas added.
The government will continue to fix fair and remunerative price of sugarcane. The minimum distance criteria between two mills will also continue, among other controls. The CCEA’s decision to remove two major controls on the sugar sector was based on the recommendation of the Rangarajan committee report submitted in October last year.
Assuring that the government will continue to supply sugar via ration shops at a cheaper rate, Thomas said: “As per the Rangarajan Committee recommendation, levy sugar has to be taken out of the system, we had a discussion. What we have decided is that the present public distribution system (PDS) system will continue at the same rate, same quantity.”
“The states will be mandated to sell sugar at current retail issue price (RIP) of Rs13.50 per kg. The state will be given the subsidy for the balance amount between RIP and the current ex-mill price calculated provisionally at Rs32 per kg," he said. The ex-mill price will be capped at Rs32 for 2012-13 and 2013-14 marketing years (September-October), he added.
The government supplies about 17-20 lakh tonnes annually through ration shops at subsidised price bearing a subsidy of about Rs2,600 crore annually, which is over and above the Rs3,000 crore borne by the industry. “At present, the subsidy is Rs 2,600 crore. By removal of levy sugar obligation, it will go up to Rs5,300 crore," he said.
Thomas said the recommendations of the Rangarajan Committee relating to cane area reservation, minimum distance criteria and adoption of the cane price formula be left to state governments for adoption and implementation as considered appropriate by them.
At an event in Mumbai on Wednesday, SEBI chief UK Sinha indirectly pointed out the games Sahara has been playing about repaying the money as per a Supreme Court order. Today, in an open attack on SEBI chairman, Sahara put out a press release saying that “rich men’s SEBI do not understand, recognise poor Investors”.
Yesterday at an event at Indian Merchants’ Chamber of Commerce in Mumbai, SEBI chairman UK Sinha pointed out the menace of Collective Investment Schemes which are thumbing their nose at the market regulator. In a veiled attacked on Sahara, he pointed out: “There is a famous instance where a company has claimed that it has refunded more than Rs20,000 crore in the last three to four months to so-called investors out of which more than 90% cent has been returned in cash. How feasible and credible can this story be?” Sinha wondered.
While Sinha did not name Sahara (neither did most newspapers who are large beneficiaries of Sahara advertisements), in a strongly worded press release issued today, Sahara attacked the SEBI chief.
Here is the text of the unedited press release in all its glory. Please savour it.
“Sahara complained that SEBI Chairman Sri U.K. Sinha neither gave time to meet our Chairman since last one year nor he accepted the invitation for appearing with our Chairman in T.V. Channel for informing people the truth and torture given to Sahara. Such a big responsible person should not give irresponsible statements that how and why Rs.20,000 crores repayments were made in 4 months and 90% was paid in cash. Well, he should have asked these questions to Sahara first.
Repeatedly we have written to SEBI and everywhere that our investors are very small and mostly living in small townships and rural areas. These investors do not go to Banks and Banks do not come to them.
Our investors profile on the basis of principal amount.
Upto Rs. 5, 000/- = 1.33 crores, upto Rs.10,000/- another 0.88 crores, upto Rs.15,000/- another 0.42 crores, upto Rs.20,000/- another 0.36 crores. This totals to 2.99 crores out of total investors of 3.07 crores. We genuinely hope that the SEBI Chairman should kindly send an amended statement to Media with realisation and apologies that why cash repayments to around 90% investors have been made and the 90% cash payments are totally justified.
Upto Rs. 20,000 repayments (including interest) it is cash payments only as per country’s law.
It should also be clear that 90% amount of investors in both the companies have come from investors upto Rs.20, 000 that is 2.99 Crores. So any logical but unbiased mind shall be convinced, accept and understand our challenge in the past also that there cannot be any case of fictitious, fake investors in Sahara.
He has also mentioned about paying Rs. 20,000 crores in 4 months. But majority payments are in 5 months plus time.
SEBI knows the reason very well that upto April 2012, esteemed investors through our committed and highly concerned field workers in Lakhs, knew that Hon’ble Supreme Court is likely to give 5 – 6 years against security of properties. We have submitted the valuation reports of properties to Hon’ble Supreme Court.
In fact in case of RNBC under regulation of Reserve Bank in 2008, RBI had given 7 years time to repay. This 7 years time was given within 10 days from the date of Prohibitory Order. So there was no chance, no reason of big rush demands of any nature.
Again the same profile of investors in RNBC also that is deposit of around Rs.20,000 crores with 3 crores plus investors. Important to note that we had almost repaid all liabilities 3 years in advance in RNBC.
But all of sudden in May 2012, 1st Week, Hon’ble Supreme Court ordered for continuous hearing in June 2012 and decision had to be given the same time.
During April 2012, one news was probably infected by some interested party which spread like wild fire in our field, Countrywide that in case of Golden Forest Company which was exactly similarly initiated and fought by SEBI. After Hon’ble Supreme Court’s decision in 2004 in this Golden Forest Company for repayment, not a single rupee has been paid to any investors till today that is in 8 – 9 years. Workers and Investors also knew that there were dozens of other Companies where, SEBI’s had taken action but not a single investor have received one rupee till now.
Also, company as sole custodian of Investors money from last 34 years got concerned about Esteemed very small investors.
Then there was big rush with demands for repayments. There were big – big queues in front of offices throughout the country. We had to repay big sum but could contain to a great extent the rush by around middle of June. So almost 60% repayments had to be done in around 45 days only. Really a very difficult time for Sahara for no fault of ours.
No fault of ours since we did this OFCD business after we got all valid permissions in writing from Central Government through Ministry of Corporate affairs as our regulator who continuously used to inspect and investigate, all Balance Sheets etc. were regularly to be submitted to them etc. etc. for last 10 – 11 years as our regulator but we faced and are facing very difficult days with retrospective effect punishments. Government departments who gave us written permission are not accused at all. Had they not given these permissions we would not have collected even one rupee and we would not have faced any problem. Well we are Prajas and they are Rajas.
One thing SEBI should understand that, had there been any hanky – panky by Sahara as accused by Chairman SEBI, then why we could not manage 5000 Crore which we have paid to SEBI.
Humble request to SEBI to act Judiciously like a very responsible and very big Regulator as big brother of society.
With exports languishing, higher oil prices, a weakening trend in invisibles and continued supply-side constraints, India’s current account deficit is expected to remain at around 5% of GDP in FY14, says Nomura in its Asia Chart Alert
In Q1 2013, India’s trade deficit is set to improve to $47 billion from $59 billion in Q4 2012. This improvement is, however, largely seasonal, as exports improve during the final month of the financial year. On a seasonally adjusted basis, the trade deficit is estimated at $53 billion in Q1 versus $57 billion in Q4, suggesting that around 70% of the expected improvement is due to seasonal factors, according to Nomura in its Asia Chart Alert.
Nomura believes that the true test of whether the trade deficit is sustainably improving will be the trend beyond March 2013, rather than in the month of March. With exports languishing, higher oil prices, a weakening trend in invisibles and continued supply-side constraints, Nomura remains sceptical and expects the current account deficit to remain at around 5% of gross domestic product in FY14 (year ending March 2014) from an estimated 5.2% in FY13.
The trade balance is expected to improve in March (data due 10-15 April 2013). This is shown in the figure below:
According to the Commerce Minister, the trade deficit in FY13 may be around $192-196 billion. This implies a deficit of $10-14 billion in March 2-13, much smaller than the deficit of $15 billion in February 2013 and $20 billion in January 2013.