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By:

Rajendra Joshi

3 December 2024 at 9:20:26 am

The ‘sweet’ scam behind the sugar price surge

AI generated image Kolhapur: A sugar shortage can push up prices. But what happens when prices rise sharply despite the country having enough sugar in its warehouses? That is the uncomfortable question emerging from the sugar market’s July-August price surge. There was no evidence of an outright shortage when the new sugar season approached. Government estimates indicated that the country would have around 43 lakh metric tonnes of carry-forward stock. The Centre, relying on this broad...

The ‘sweet’ scam behind the sugar price surge

AI generated image Kolhapur: A sugar shortage can push up prices. But what happens when prices rise sharply despite the country having enough sugar in its warehouses? That is the uncomfortable question emerging from the sugar market’s July-August price surge. There was no evidence of an outright shortage when the new sugar season approached. Government estimates indicated that the country would have around 43 lakh metric tonnes of carry-forward stock. The Centre, relying on this broad availability, permitted exports of 20 lakh tonnes. And yet, the market behaved as though sugar had suddenly become scarce. At the beginning of July, tender prices were around Rs 3,800 a quintal. By the latter half of the month, prices began climbing rapidly. In the retail market, sugar prices that were around Rs 45 a kg reportedly touched Rs 78. The government responded with stock limits and permission for duty-free imports of 10 lakh tonnes. But these interventions address the symptoms. They do not answer the more fundamental question: what caused the price spike in the first place? The first clue could lie in the lifting quota. The quantity of sugar released into the market in July was lower than expected. By itself, a lower monthly quota need not create a crisis when overall stocks are comfortable. But markets are driven not only by physical availability; they are also driven by expectations. A smaller release can create the perception of scarcity. Once that perception takes hold, stock-holding can become more profitable. The initial spark need not be large if the market has enough speculative fuel. This is why the July episode deserves a forensic examination. The timing is particularly significant. July marked the transition from Ashadh to Shravan, when the festive calendar begins and sugar consumption traditionally strengthens. At such a time, the normal expectation would be that adequate stocks are released into the market to prevent abnormal price escalation. Instead, prices moved sharply upwards. Was this coincidence, a genuine mismatch between demand and supply, or something more? The GST system offers an unusually powerful investigative tool. Every registered transaction leaves a digital footprint. A sugar mill selling to a registered trader generates an invoice recording the quantity, value, date and buyer. The trader’s subsequent sale generates another transaction. GST returns and e-invoices can therefore help create a chain showing who purchased sugar, at what price, when it was invoiced and when it was subsequently sold. This information can be matched with physical stock registers, dispatch records and warehouse inventories. The key question should be simple: Did the sugar that was shown as sold actually enter the market? Suppose a trader purchased substantial quantities in July when prices were relatively low, but the commodity remained physically stored at or near the mill. If the stock was released only after prices rose substantially in August, investigators would have a legitimate reason to examine the transaction more closely. That alone would not prove hoarding or cartelisation. A commercial decision to hold inventory is not illegal merely because prices subsequently rise. Large purchases before a price surge. Delayed physical movement. Repeated transactions among related entities. Unusually high margins. Sudden releases when prices peak. These are precisely the patterns that a data-led investigation can identify.

Bad Roads, Ugly Politics


The pathetic state of roads in Mumbai city as well as its suburbs has made daily commute a dangerous affair. The residents are miffed with the BMC over its lackadaisical attitude. Mumbaikars tweet photos, post videos to grab attention, but everything is in vain. Who cares for the common people. Backbreaking journeys have become part and parcel of life. Political leaders are busy mud-slinging.


This year the monsoon took a break after almost four and half months. During this time some of the roads virtually became non commutable. It may be recalled that the Chief Minister Eknath Shinde first announced to make Mumbai roads pothole free.


Its almost two years now the BMC has concretised only 9 percent of roads it planned to concretise. This decision was taken when it came to light that due to the properties of bitumen in asphalt roads, potholes are a regular occurrence due to contact with water during monsoons.


Hence, to solve the problem of potholes, the corporation has adopted a policy of cement concreting of 6-meter-wide roads in phases. The decision was taken but the dilly-dallying affair made things more difficult.


Mumbai’s traffic does put a lot of strain on roads which is not the case in the other developed countries. Second most important aspect is concretisation of roads is done partly and in phases.


The worst problem which is faced is repeated digging for cables and drainage, which weakens the roads. Above all corruption in BMC makes matters worse as a result everything comes to grinding halt.


According to experts, repairing potholes is a reaction with symptomatic treatment. By and large we are dispensing superficial treatment without addressing the root cause. The long-term solution will be to have roads with no potholes but what we need is the means and technology to achieve this. But for this political will is necessary which we lack on every step.


Mumbaikar’s are convience that corruption in the municipal corporation is the main reason. Contractors have had a monopoly over the last 20 years and this is the reason why reputed companies never come ahead for these projects.


As a result, in the name of attendance and repair, the BMC does shoddy work. Crores are spent but the end result is nothing. The BMC is not paying attention to the crust. If the crust is weak, potholes will see an increase. Without any thought or technical know-how, potholes are filled with cold mix.


This is the reason why the city and suburbs continue to have craters on the roads.


Craters, a serious threat to the safety and security of people. Mumbaikars fade up from their repeated visits to orthopedic surgeons.


They are in a mood to teach a proper lesson to those who were at the helm of the affairs.

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