Measuring the impact of Government Regulations on the Private Sector Sugar Mills of Uttar Pradesh

Authors: Shreoshee Mukherjee, Ridhi Verma, Kaushik Basu

Abstract

In this study, we examine the effects of regulatory instruments on the financial performance of 18 private firms in the sugar industry of Uttar Pradesh using panel data from 2000 to 2015. The econometric analysis is conducted to figure out to what extent price regulations for sugar industry impacts the profitability of the firms. The datasets are collated from secondary sources using Capitaline from Rabo Bank’s Food & Advisory Research Division and Indian Sugar Mill Association Year Books – both of which have historical datasets for the financial and productivity indicators to study the economic impacts. It is observed that the profitability of the private mills drops considerably as the cane prices regulated by the state government increases. The other instruments to regulate the byproducts like molasses and the regulation on jute packaging also adversely affect the profitability of the private mills.