Sugar Situation a ‘Fiasco’ and Policy Failure, Says Economist Ashok Gulati

Agricultural economist Ashok Gulati has strongly criticised the government’s handling of India’s sugar situation, describing it as a “fiasco” and raising serious questions about the timing of policy decisions, including the delayed opening of sugar imports.

India’s sugar situation has come under sharp scrutiny following a recent discussion between veteran journalist Karan Thapar and leading agricultural economist Ashok Gulati, who described the handling of the crisis as a “fiasco” and a failure of policy.

Speaking in an interview for The Wire, Gulati questioned why sugar prices had risen sharply in recent weeks and whether the government should have permitted imports much earlier. He also raised concerns over the timing of the policy response and whether the delay had worsened the pressure on consumers.

Gulati, a former chairman of the Commission for Agricultural Costs and Prices (CACP) and currently a distinguished professor of agriculture at the Indian Council for Research on International Economic Relations (ICRIER), discussed the broader policy failures that may have contributed to the current situation.

The conversation focused on several key questions: Why did sugar prices rise so sharply? Could imports have been allowed earlier? Was the government’s response delayed? And what responsibility does public policy bear for the situation?

Why Are Sugar Prices Rising?

A sharp rise in sugar prices can have consequences far beyond the commodity market.

Sugar is a widely consumed household commodity and is also an important raw material for several industries, including food processing, beverages, confectionery and hospitality. Rising prices can therefore affect both household budgets and business costs.

Market prices are generally influenced by several factors, including domestic production, available stocks, consumption demand, weather conditions, government policies and international supply conditions.

When policymakers intervene in the sugar sector through export restrictions, stock controls, production rules or import decisions, the timing of those measures can become particularly important.

A delay in responding to a tightening supply situation can allow market pressure to build, potentially contributing to higher prices before corrective action takes effect.

The Question Over Delayed Sugar Imports

One of the central issues raised in the interview was whether sugar imports should have been permitted before August 20.

According to the discussion, the timing of the government’s decision to allow imports has become a major point of criticism.

Import decisions are often used by governments to increase domestic availability when supplies are under pressure. However, imports cannot immediately resolve a shortage or price spike.

Once an import policy is announced, traders and buyers must arrange contracts, shipping, insurance, financing and delivery. The sugar must then reach Indian markets and move through the domestic supply chain.

This means that a delayed import decision can take additional time to influence actual retail and wholesale prices.

The key policy question, therefore, is not only whether imports are eventually permitted but whether action is taken early enough to prevent supply pressure from becoming a major price problem.

Ashok Gulati Calls Situation a Policy Failure

During the discussion with Karan Thapar, Gulati used strong language to describe the government’s handling of the situation, characterising it as a “fiasco” and a failure of policy.

His criticism centred on whether policymakers had adequately anticipated the developing market situation and responded quickly enough.

Gulati also questioned whether the government’s approach could be considered irresponsible, particularly if warning signs about domestic supply and prices were available before the recent increase.

The criticism reflects a broader debate over agricultural and food policy in India: how governments should balance the interests of producers, consumers, industry and the overall economy.

Sugar policy is particularly complex because decisions that support one part of the sector can create pressure elsewhere.

The Difficult Balance Between Farmers and Consumers

Sugar is closely linked to India’s agricultural economy, particularly sugarcane cultivation and the large network of sugar mills that depend on cane supplies.

Government policy must often balance several competing priorities.

Farmers require stable and remunerative prices for their crops. Sugar mills must manage production costs and maintain financial viability. Consumers, meanwhile, expect essential food items to remain affordable.

When domestic supplies tighten, policymakers face difficult choices.

Restricting exports can help preserve domestic availability, while permitting imports can increase supply. However, both decisions can have consequences for farmers, millers, traders and consumers.

This makes accurate forecasting and timely intervention crucial.

Why Timing Matters in Commodity Policy

The sugar debate has once again highlighted the importance of timing in government policy.

Agricultural production follows seasonal cycles, while market demand can continue throughout the year. A gap between projected supply and actual demand can develop quickly if production estimates change or if consumption is stronger than expected.

Government agencies and policymakers therefore rely heavily on production forecasts, stock data, consumption estimates and market-price trends.

If the data signals that domestic availability may tighten, early action can provide more time for markets to adjust.

Waiting until prices have already risen sharply can make corrective measures less effective because consumers may have already experienced the impact of higher prices.

This is one of the central concerns raised in the discussion involving Gulati and Thapar.

Sugar Policy Has Wider Economic Implications

The sugar market is not an isolated part of the economy.

Changes in sugar prices can affect household expenditure and input costs for a wide range of businesses. Higher sugar prices can eventually contribute to higher prices for processed foods and beverages.

Commodity inflation can also become an important concern for policymakers, particularly when food prices are already under pressure.

For this reason, the management of agricultural commodities is closely monitored by economists, businesses and consumers.

Policy decisions related to sugar production, exports, imports and domestic stocks can influence the availability and price of the commodity across the country.

The Role of Better Forecasting

The controversy has also brought attention to the importance of reliable agricultural forecasting.

Governments need accurate information about:

• Sugarcane production
• Expected sugar output
• Domestic consumption
• Available stocks
• Export commitments
• Weather conditions
• International prices

Better forecasting can allow policymakers to identify potential shortages earlier.

For a country with a large agricultural economy, timely data can be essential for managing both food security and price stability.

Economists have frequently argued that policy decisions should be based on transparent and regularly updated assessments of supply and demand.

The current debate could renew calls for stronger market intelligence and faster policy responses.

Can Sugar Imports Stabilise Prices?

Allowing imports may increase domestic availability, but the impact depends on several factors.

These include the volume of imports permitted, global sugar availability, international prices, shipping costs and the time required for imported sugar to reach domestic markets.

If global prices are high, imports may not necessarily result in significantly cheaper sugar for consumers.

However, imports can still increase overall availability and potentially reduce the pressure created by a tight domestic market.

The effectiveness of such a measure depends heavily on whether it is introduced before supply conditions become critical.

This is why the timing of the August 20 import decision has become an important focus of the current debate.

The Government’s Policy Response Under Scrutiny

Gulati’s comments have placed the government’s handling of the sugar market under renewed scrutiny.

The discussion raises broader questions about how quickly authorities respond to warning signs in agricultural commodity markets and whether existing policy mechanisms are capable of preventing sharp price movements.

Critics may argue that delayed intervention can allow a manageable problem to become a larger market disruption.

Supporters of a cautious approach, however, could point to the need for governments to carefully evaluate production data and avoid premature interventions that may create unintended consequences for farmers and producers.

The policy challenge lies in finding the right balance between caution and timely action.

What Happens Next?

The direction of sugar prices in the coming weeks will depend on domestic supply, the arrival of additional stocks, import arrangements and future government decisions.

Market participants will also watch for further policy announcements concerning imports, domestic stocks and supply management.

For consumers, the most immediate concern will be whether prices stabilise.

For farmers and sugar mills, the focus will remain on how policy decisions affect production economics and the broader sugar industry.

And for policymakers, the current controversy serves as a reminder of the consequences of delayed responses in a large and strategically important commodity market.

A Larger Debate Over Agricultural Policy

The interview between Karan Thapar and Ashok Gulati goes beyond the immediate rise in sugar prices.

It raises fundamental questions about India’s approach to agricultural commodity management.

Should governments intervene earlier when warning signs emerge? Are existing forecasting systems sufficiently accurate? Should import and export policies be more predictable? And how can policymakers protect consumers without harming farmers and domestic producers?

These questions are likely to remain relevant even after the immediate sugar-price situation changes.

Gulati’s criticism, particularly his description of the situation as a policy failure, has ensured that the debate will extend beyond sugar prices alone.

The episode may ultimately become a broader discussion about transparency, forecasting, accountability and the speed of government decision-making in India’s agricultural markets.