Benegal, who heads the government-appointed censor board revamp committee, was shown the film, based on drug abuse in Punjab, yesterday, amid the censorship controversy around it.
"It's an extremely well-made film but it also points out to a rather unfortunate fact that drugs routed from Central Asia to Afghanistan come into India via Punjab and the state is vulnerable to this kind of infiltration, which has caused problems over a period of time," he told a TV news channel.
The director, 81, said much of the debate over the movie was sparked because people think the film is against the state of Punjab. Benegal said this notion is wrong.
"The film in that sense points to a very important problem. I don't think one should take it into mean that state is colluding with it. This is absolute wrong reading of the film itself according to me.
"I have a feeling a lot of controversy has started because everybody feels that it is blaming the state on the contrary state is vulnerable," the director said.
Benegal, however, refused to comment on the cuts demanded by the censor board in the movie.
"I would not like to comment on the issue because I don't wish to interfere in the working of the CBFC."
One cut, which evoked a huge debate, is the removal of the word "Punjab" from the movie and its title.
When asked if the censor board is justified in making this demand and whether filmmakers should be given complete creative freedom, Benegal said, "I won't comment on it because it's the filmmaker's view. Whether 'Punjab' should have been used, I won't say as it has a lot to do with sensibilities and sensitivities. The important thing is that the filmmaker has dealt with a serious issue."
The controversy took a political turn after parties like AAP and Congress blamed Nihalani of buckling under pressure from the Punjab government while Nihalani accused Anurag Kashyap of taking money from AAP.
Meanwhile, another board member, Chandramukh Sharma, has come out against the functioning of Nihalani after Ashoke Pandit.
"If the chairman has suggested this type of disclaimers, I would request the chairman to go to the central government and ask to change the name of CBFC to pro of government," Sharma said.
When asked about the cuts suggested by Nihalani for the film, he said, "Totally unjustified. The regional officer and chairman have exceeded their powers. They don't have authority to do suggest this type of cuts."