taxes, we have used the full excise tax rate per quintal during each year as reported in _Cooperative Sugar,_ but we have not been able to adjust for an extremely complex system of excise tax rebates which were varied from year to year over the period, with the principal purpose of encouraging the mills to increase the amounts of cane crushed at the beginning and ends of the crushing seasons (usually October / November and May to September respectively) when the sugar content of the cane is low.26 Depending on the production during these periods and the size of the rebates, we have somewhat underestimated the average prices the mills actually received, with a larger underestimation during the 1 960s and 1 970s when excise taxes were high, but much less during the 1980s and after when excise taxes were much lower. Another complication for which we have not been able to allow, is the policy which started in 1975 of encouraging new investment in sugar milling by allowing lower levy ratios (in some cases zero) in the initial years (usually the first 5 to 10 years of production) to sugar produced from new mills or from expansion investments in existing mills. This system was also used to encourage investment in areas where the cane has a relatively low sugar content by graduating the levy ratios according to high, medium and low recovery areas. New and expansion investment has also been encouraged by giving excise tax rebates in addition to the crushing period rebates mentioned above. Both of these policies were frequently changed over the period, 27 often from year to year . We should also comment that it has not been possible to allow for illegal unreported free market sales by mills which may be tempted by the big margin of free market over levy prices in many years, not to mention the possibility of evading excise duties and the cess on such sales.<sup>28</sup> If data were available that would permit all of these complications to be taken into account, the average ex-factory realization prices would be somewhat higher than the prices we have estimated. According to the Goldar and Gulati study ( p. 93) the extent of the resulting underestimation of sugar protection was probably not large during the period covered by their study (1981-89), but it may have greater in the 1960s and 1970s because of the considerably higher excise tax rates during those years. Some indication of the upper limit to the resulting underestimation of the NPCs for mill sugar is given by the estimated NPCs for khandsari in UP ( see below) since khandsari is not subject to the levy controls, excise taxes are lower, and all of it can be sold on the free market.

When comparing the price of a commodity in a domestic market with prices in international markets, as far as possible the two prices should be for a similar specification, variety and quality. This raises a problem in computing the nominal protection for Indian plantation white sugar, since world trade is mainly in raw and fully refined white sugar, and international price data for plantation white is not consistently reported. Based on some limited comparisons of international prices, Goldar and Gulati assumed that the premium paid for India's plantation sugar over the price of raw sugar is 90 percent of the premium of international prices of fully refined sugar over the international prices of raw sugar. We have made the same assumption. Specifically ,the world price fob Europe of plantation white sugar price has been

**26** Details of the excise tax rebates schemes for early and late crushing are given for each year since 1961 in the _Indian Sugar Year Book_

**27** Details of these schemes are also given in the _Indian Sugar Year Book_

**2S** The 1984 black economy report identifies this as one of several major sources of unreported incomes in the sugar industry. The others are unreported sales of molasses and payments for cane at prices below the official controlled prices. See Acharya and Associates (1984) Ch. VI, and Goldar and Gulati (1991) pp .91-92.

31