Guwahati, Feb. 5: While families across the country were feeling the pain of rapidly rising prices, the sugar mills were busy making profits, earning more than Rs 123 crores through the open-market sale in October 2009 of undelivered stocks of levy sugar lying with the sugar mills since 2006-2007.

Non-levy sugar is meant for sale in the open market. Unsold or un-dispatched stocks of non-levy sugar are automatically converted into levy sugar for sale through the public distribution system (PDS) at a vastly discounted rate.

The sale of levy sugar, which is meant for the PDS, was facilitated through a notification of the directorate of sugar on September 30, 2009. Documents in possession of this newspaper indicate that most of the undelivered stock of levy sugar was hoarded by the sugar mills of Maharashtra.

The directorate of sugar, through an order (No. SC-II/2008-09/FS/O dated 30 September 2009) allowed the sale of 72,684.3 metric tonnes of levy sugar in the open market. According to the notification, these undelivered stocks of levy sugar were from the year 2006-07, when the price of the sugar was between Rs 1,320 and Rs 1,550 per quintal in the open market.

The sugar directorate allowed the undelivered stocks of levy sugar, which should have been sold through the public distribution system, to be sold in the open market by mills in September 2009, when sugar was selling at the rate of Rs 3,000 per quintal.

According to the existing provisions of the government, unsold stocks of levy sugar should be delivered to the Food Corporation of India instead of allowing it to be stocked by mills. The order of the sugar directorate is also evidence in itself that undelivered stocks of levy sugar were lying with the mills since 2006-07, implying that the mills were hoarding the sugar and the ministry of consumer affairs, food and public distribution was aware of this.

The deputy director of the sugar directorate, Mr Sanjay Kumar, who signed the order, was contacted by this newspaper and asked why unsold stocks of levy sugar were allowed to be sold in the open market instead of going through the PDS, said he was not authorised to talk to the media. The order was issued following a policy decision of the ministry. Senior officials of the ministry could not be contacted as they were busy in meetings when contacted.

According to the sugar directorate order, about 88 per cent of total undelivered stocks of levy sugar of the year 2006-07, which were allowed to be sold in the open market while the country was experiencing an acute shortage of sugar, were actually in the possession of the sugar mills of Maharashtra.

According to a rough estimate, if sugar was sold at the lowest prevailing price in October — Rs 3,000 per quintal — the Maharashtra mill owners made a profit of Rs 109 crores through just one such notification of the concerned ministry.

Documentary evidence in possession of this newspaper indicates that the sugar directorate also allowed the validity period of non-levy sugar to be extended more than five times in 2009 to stop it being converted into levy sugar.

Ironically, these orders, copies of which are in possession of this newspaper, were issued after the Union Cabinet decision of April 16, 2009 directing the ministry to follow the guidelines of weekly allotment of non-levy sugar and converting unsold stocks of non-levy sugar into levy sugar for sale through the PDS.

Manoj Anand