New Delhi:
Twenty-four hours after farmers stormed Delhi's streets and the Opposition stormed Parliament, the government has reversed its sugarcane policy. (
Read: The controversy in a nutshell)
Determined to gain some brownie points from Uttar Pradesh's farmers, the Congress has said Rahul Gandhi intervened on their behalf in a meeting with the prime minister. UP votes in 2012, and Gandhi is the man in charge of reviving the Congress in the state.
The government's change in stand was formally announced after an all-party meeting on Friday. This is how sugarcane will now be priced. The centre will establish the Fair Remunerative Price (FRP), the minimum price that mills have to pay sugarcane farmers. States are free to set their own price (State Advised Price or SAP). If, as in the case of Uttar Pradesh, the state's price is higher than the FRP, it's mill-owners who will have to bear the difference.
In a new ordinance introduced in October, the centre had said state governments would have to pay that difference. Mayawati had objected, pointing out that states can't afford this.
The Opposition stands pacified. "We are happy that the government has agreed to look into the farmers' interests and it is the farmers who have benefitted," said BJP leader Sushma Swaraj. The BJP had threatened not to let Parliament function till the government amended its policy. More worrying for the Congress-led UPA government was the fact that its own allies, like Mamata Banerjee and Tamil Nadu's DMK, supported the protests.
The new policy will make farmers and politicians happy, but it's likely to infuriate mill-owners, a powerful lobby.
In addition to being forced to pay the difference between the centre and state's prices, they're obliged to sell a part of their sugar to the government at highly subsidised rates. Mill-owners say as a result, they've incurred losses worth 14,000 crores on this front as well. Fed up, they've taken the central government to court and won their case.
So the government now has to figure out how to pay that whopping 14,000 crore bill.