This is another smoke and mirrors job to fool the masses, as people are very easily taken for a ride by just numbers that don’t mean anything on their own. The intellectualy challenged who really think they know more because they just hang their pea brains on just one point, being blinded to the reality around them, have been led astray by articles of dubious repute, and instead must be looked at in context. Just like the fact that the previous government used US$4Billion in reserves just to protect the rupee that should have been left to depreciate and find its natural level, (meaning its intrinsically realistic value) bearing in mind the real factors of the economy. Therefore it is rich of the former Governor of the CBSL to find blame, in his FT article yesterday, in an exchange rate drop whose history was directly related to his inactions during his tenure in borrowing heavily, externally to prop a worthless currency.
So it should be with sugar.
Due to various production subsidies by the Government and favorable growing conditions, India is now the world’s largest producer of sugar, for at least 2018, and is sitting on a ton of sugar that it knows not what to do with.
We have sugar importers who are a mafia and got their tentacles in the government and so will not permit the Government to do a deal with India, to buy sugar cheap to reduce their surplus, as there is big money at stake.
If I was running Sathosa and I purchased 100,000 Tonnes of sugar and begin selling it with the government taxes of Rs45 after the recent increase, for a total price of Rs100, where Sathosa will have Rs15 profit ALSO, it is going to be sabotaged by the mafia as being anti competitive or equivalent. However as most of the sugar was purchased pre cess increase this should be sold at Rs85/kg instead, but is not. The lowest I have found is Rs100 today.
One must remember that the GOSL takes a while to get their act together. This increase in the sugar cess by Rs15 was long awaited as the world market prices had plummeted a long time ago, and the Sugar Mafia had imported the sugar at the lower prices in large quantities before the increase in Cess. So just by holding onto the stocks they are making a killing, of billions in fact.