As sugar prices continue to climb, agricultural economist Ashok Gulati has pointed to specific structural and policy-related issues as the root causes of the current market volatility. According to Gulati, the government’s failure to take timely action in managing sugar stocks has exacerbated the situation, leaving the market vulnerable to supply shortages.

Furthermore, Gulati highlights the significant impact of the government's ethanol blending program. By diverting a substantial portion of sugar production toward ethanol manufacturing, the supply available for domestic consumption has been reduced. This shift in resource allocation, intended to promote renewable energy, has inadvertently tightened the sugar supply chain, leading to the price spikes observed by consumers.

While the report focuses on these two primary factors, it does not address potential counterarguments from government officials or industry advocates who might argue that ethanol diversion is a necessary long-term strategy for energy security. The analysis centers on the immediate economic consequences of these policy decisions, suggesting that a more proactive approach to stock management could have mitigated the current price surge.