Centre might soon decide on package for sugar sector

The government is expected to take a call on a series of demands raised by sugar millers, farmers and others to lower sugarcane payment arrears to farmers, which reached Rs 19,000 crore by the end of financial year 2014-15, in the next few days.

Besides, officials said the Centre might not lower the value of foodgrain being purchased from farmers by relaxing their quality norms. Decisions to this effect were taken at a meeting held at the Prime Minister's Office on Monday.

Food Minister Ramvilas Paswan, Transport Minister Nitin Gadkari, Finance Minister Arun Jaitley and Home Minister Rajnath Singh participated in the meeting.

Till date, the Centre has relaxed the wheat procurement norms in the major producing states of Punjab, Haryana, Madhya Pradesh and Gujarat but has simultaneously also reduced the purchase price of lower quality grains. However, state governments have been substituting that from their own resources, which have imposed an additional burden of Rs 100-125 crore on them.

"The Centre will favourably consider the suggestion that there not be any reduction in purchase price of inferior quality wheat, in the interest of growers," a senior official said.

On sugar, official said, apart from creation of a buffer stock of 2.5-3.0 million tonnes to absorb the surplus, the issue of re-imposition of release order mechanism for controlling the sale in open market was also discussed.

The ministry also forwarded the other demands made by farmers and representatives from state governments, which included raising the import duty to 40 per cent, incentive on export of white sugar, interest-free loans to mills to clear off cane dues and increasing the quantum of mandatory ethanol blending from the existing 10 per cent

The release order mechanism under which the Centre determined the quantum of sugar that a mill could sell in the open market was discontinued few years back, following deregulation of the sector.

The sugar industry is finding it difficult to pay cane price to farmers, as mills have been incurring losses for the last few years due to low realisation and high cost of production.

The Centre has recently provided a subsidy of Rs 4,000 per tonne for the exports of 1.4 million tonnes of raw sugars to improve cash-flow of millers.