Wednesday, September 25, 1996

Sugar and spite

Powerful cooperatives are under pressure from a ruling alliance that is looking at ways to combat their political patrons, the Congress.
In a significant judgement passed two weeks ago, the Mumbai High Court ordered the Shiv Sena-BJP government in Maharashtra to release its portion of the share capital of the sugar cooperative, Bhimashankar Sahakar Sakhar Karkhana, promoted by Congress MLA Dilip Valse-Patil, by December 31. A fortnight earlier, another Congress MLA, Patangrao Kadam, promoter of the Sangli-based Sonhira Sakhar Karkhana, won a similar judgement.
For political observers in Maharashtra, the implications of these developments are not hard to gauge. The political battle between the ruling Shiv Sena-BJP combine and the Congress has spilled onto the sugarcane fields — though that is not new either. This time, though, the ruling alliance is in a piquant situation; it has to finance sugar cooperatives that back their opponents.
Maharashtras 107 sugar cooperatives — there are 110 sugar factories in the state — contribute over 30 per cent of the countrys sugar production. They have been a powerful vote bank for the Congress as well as an important source of funds. Theyve also thrown up leaders for the party — there are 15-odd MLAs and around five MPs who are sugar barons. Naturally, the cooperatives received several concessions from the former Congress governments. Sugar analyst and consultant, S M Gothoskar points out, The sugar cooperatives used to get unreasonable concessions. Because this government has stopped these concessions, they believe it is harassing them.
The political tussle is evident from the recent court cases. A sugar cooperative has a debt-equity ratio of 60:40. On the equity side, the government gives share capital to a sugar unit in the proportion of 3:1. Both petitioners had argued that the state government had favoured four of the 17 new sugar cooperative licence-holders in the state because they were Shiv Sena-BJP sympathisers.
Of the budgetary provision of Rs 100 crore that the state made towards share capital for new licences, the government granted Rs 20 crore to the four cooperatives. The promoters of these units include former minister of state in the alliance government, Ashokrao Patil-Dongaonkar, and the late MLA, Sampatrao Deshmukh.
It was also argued that the government had planned to divert the funds to six more units that had been given licences by the 12-day BJP government. These include sugar factories promoted by deputy chief minister, Gopinath Munde and cooperation minister Jaiprakash Mundada.
Congressmen view the judgement as a vindication of their stand that the government is victimising sugar cooperatives to settle scores with the former ruling party. They have also been discontented with certain amendments that the present government has made to the Cooperatives Act, under which it can supercede a cooperative board of directors if elections are not held on time (see box).
The present government has certainly been trying to infiltrate Congress bases. In some cases, cooperatives have been compelled to accept ruling party nominees on their boards to earn their share capital from the government. Says Shivajirao Patil, Congress MP and president of the National Federation of Cooperative Sugar Factories, The government is insisting that some of the newly- formed cooperatives take people from the Shiv Sena and the BJP on their board. He gives the example of the Ranwad sugar factory in Nashik district, which was promoted by Congressmen who have now been forced to join the Shiv Sena.
These problems have come at a time when the sugar cooperatives in the state — as elsewhere in the country — are already under economic pressure. Sugar cooperatives are currently facing a crisis of plenty. Sugar production has peaked in the last two years. Last year, the country had a record sugar production of 146 lakh tonne It is estimated to be 165 lakh tonne for 1995-96 (the sugar season is from October to September).
Maharashtra produced roughly 52 lakh tonne this year — in fact, only 4 of 115 sugar-producing countries produce more than Maharashtra alone. As a result of the glut, not only are Maharashtras godowns full but some stocks are even lying in the open and cooperatives may have to construct more storage space this season. Says Shivajirao Patil, Last years stocks should have been finished by November-end but we were selling them till April 1996. And by April, 80 per cent of the new stock had also come in — so what do you do?
To cope with the crisis, the Maharashtra Rajya Sahakari Sakhar Karkhana Sangh, or Sakhar Sangh, has requested the Maharashtra government to increase buffer stock from 5 lakh to 15 lakh tonnes. Control sugar, which is distributed by the government, keeps lying in our godowns and we have to bear the interest on it so we have asked the government to take it as buffer stock and release it as and when required, says Vijaysinh Shankarrao Mohite, Congress MLA and chairman of the Sakhar Sangh.
Sugar cooperatives have been under even more pressure because of recent changes in state government policies. For instance, because of the increased cane production this year, the crushing period was extended beyond April 15. According to Mohite sugar cooperatives used to get a transport subsidy and exemption from purchase tax for production after April 15. This was always done but this year, the government didnt do it. Rather, cooperatives were ordered to pay the purchase tax in one instalment instead of in two instalments - half at the start of the season and half at the end - as has been the norm for the past 30 years.
On each tonne of sugarcane crushed, the government levies a purchase tax of Rs 25. Each cooperative crushes an average 10 lakh tonnes a season, paying purchase tax of Rs 2.50 crore each year.
In a notification on June 14, however, the sales tax commissioner withdrew this facility. Sugar mills were warned that their accounts would be frozen unless the entire tax was paid in three days and, subsequently, accounts of about 85 .

No comments:

Post a Comment