The sugar price surge in India stemmed from underestimated lower output, not primarily ethanol diversion, which was a minor factor. The government failed to anticipate the shortfall by February, reacting late with an export ban in May and stock limits in July. These “knee-jerk panic actions” exacerbated the crisis. The author argues that instead of banning exports, the government should have slashed import tariffs to zero by April. This crisis exemplifies a policy failure, stemming from excessive government controls and a lack of market intelligence, preventing market forces from balancing supply and demand effectively.