The Sugar Industry in Maharashtra

Maharashtra witnessed an economic revolution in its rural areas because of the pioneering efforts of Dhananjayrao Gadgil, Vithalrao Vikhe Patil, Vaikunthbhai Mehta (among others) and some well-known names from the private sector such as the Walchand group, Somaiyas and Dahanukars, in establishing the sugar cane industry in the last century. The sugar industry became the bridge between agriculture and industry in the state and ushered in rapid rural development. This multifaceted industry engendered in its wake the development of rural infrastructure, ancillaries, cottage industries such as jaggery and khandsari (unrefined, raw white sugar), education, health services, farm mechanisation, milk industry, ethanol and other chemicals, and power generation. Consequently, the general standard of living in these areas was raised considerably.

Initially, in the 1950s and 1960s, it was but natural for the government to grant favourable status to the cooperative sugar factories to boost the movement and ethos of cooperation. However, continued state intervention and political influence, well after its establishment, precluded level playing conditions for all stakeholders in the industry. Regional interests may be the reason why licences were granted. This is despite the knowledge that by allowing higher density of factories with lower crushing capacities, economies of scale could never be achieved in the production of major products or byproducts. Further, the factories sanctioned had little correlation with the irrigation potential of the region. As a result, more than a fair share of the developed irrigation potential in the region was diverted to the sugar cane crop (Planning Commission 2007).