ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Sugar SectorSubscribe to Sugar Sector

The Proposed Deregulation of India’s Sugar Sector

The deregulation of agricultural markets and its scope for benefits to farmers are examined using the system generalised method of moments to estimate India’s supply equations of sugar and sugarcane. An alternative theoretical framework is used to generate the supply equations—different from Nerlove’s Adaptive Expectations-based supply response function or the assumption of profit-maximising firms operating in a freely competitive market—which fits into the sugar sector’s regulatory system in India. The findings suggest that the proposed deregulations will not reduce the sugar sector’s cyclicality nor will it create a win-win situation for farmers and mills. Instead, the mills will benefit at the cost of farmers.

India’s Sugar Woes at the World Trade Organization

Policies related to India’s sugar sector are facing adjudication in a case brought to the World Trade Organization. It is alleged that India provides market price support on account of fair and remunerative price and other measures to the sugar sector in excess of maximum applicable permissible limit under the Agreement on Agriculture. Without these policies, the sugar sector, employing over 50 million farmers, would face a tremendous challenge. Irrespective of the legal outcome and given the minuscule policy space available under the amber box, this paper finds the provisions of the blue box feasible and worthwhile to explore for the distressed sugar sector. Further, it highlights the asymmetries and imbalances in the AoA that adversely impact the policy space of developing members, including India.

 

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