Sugar Co-operatives in Maharashtra: A Political Economy Perspective

The origins of the powerful sugar lobby in Maharashtra date back to the 1950s. Post Independence, cooperatives formed an integral part of the Congress vision of ‘rural development with local initiative’. A ‘special’ status was accorded to the sugar cooperatives and the government assumed the role of a mentor by acting as a stakeholder, guarantor and regulator. Persistence of the maze of regulations instituted five decades ago, despite its stated rationale being thwarted, suggests that it is maintained by entrenched vested interests. This paper calls for a fresh start with minimal regulations. The teething problems and initial market failures that may occur cannot be worse than the continuing saga of government failure.