As banks had given credit to the industry against the sugar deposited with them on the basis of prices of free sale sugar, they want that the industry should reimburse them on the sugar lent to the government on levy prices as it is lower than free sale prices.

The industry, however, argues that since they are lending to the government to help it in its time of need, the banks should also bear with it as it was only a matter of 5-6 months when the loaned amount would get adjusted against the next season's figures.

The government has already taken up the matter with the Reserve Bank of India, but specific orders are yet to be issued.

This is not the first time that the government has fallen short of PDS sugar as during most festival seasons when it gives out more sugar tothe public at administered rates, it has to fall back on manufacturers to bridge the deficit.

Interestingly, had the decision on imposing levy on imported sugar, as was discussed in the meetings held by the government on moves to regulate sugar imports, been implemented, the government would have had six lakh tonne of levy sugar in excess of the current amount and would not have had to borrow at all.

The government has been so lax in regulating imported sugar that the amended sugar control order passed in June 26 which says that imported sugar would also be subject to release control has not yet been implemented.

It is not surprising that sugar manufacturers are now fuming with frustration because the government has not only failed to provide a level playing field for the domestic manufacturers vis-a-vis the overseas sugar suppliers but has also not fixed the levy price for the current year.

Because of a disagreement between the food ministry and the finance ministry on the modality of adjustingmolasses prices and the share to be passed on to the producers, increase in levy prices has not yet been decided despite the fact that the government has drawn the entire levy amount and has come back to the industry for a loan.