CCEA may again discuss raw sugar export subsidy tomorrow

Farm ministry meanwhile has struck to its assessment that any subsidy below Rs 3,500 per tonne not feasible

A Cabinet Committee on Economic Affairs (CCEA) is once again expected to discuss the vexed issue subsidy for export of 4 million tonnes of raw sugar in a meeting expected to be held on Tuesday.

Officials said in its revised proposal, the food ministry have favored raising the quantum of subsidy from Rs 2,000 per tonne to around Rs 3,000 per tonne only with perspective effect.

But, if the subsidy is provided from October 1, 2013 onwards (start of the 2013-14) sugar season, it should be capped at Rs 2,000 per tonne. The farm ministry meanwhile has struck to its assessment that any subsidy below Rs 3,500 per tonne is not feasible as international price of raw sugar is much below its cost of production in India.

The CCEA had last week, deferred a decision on granting a cash subsidy for export of 4 million tonnes of raw sugar because of difference over the quantum of subsidy. Following, which there were few meetings between food minister K.V. Thomas and Agriculture Minister Sharad Pawar. However, no conclusion was reached, following which now the matter is expected to be settled in the CCEA.

A subsidy of Rs 2,000 per tonne which would have cost the exchequer Rs 800 crore, while a subsidy of Rs 3,500 per tonne would cost the exchequer Rs 1,400 crore.

Both the subsidies would be adjusted from the Sugar Development Fund (SDF) over a period of two years. The export subsidy is part of a package worked out by top ministers to bail-out the sugar sector which has been facing losses due to mounting cane arrears and falling sale price.