CCEA defers subsidy on raw sugar exports

The Cabinet Committee on Economic Affairs (CCEA) today deferred a decision on fixing subsidy for exports of raw sugar, amid differences between food and agriculture ministries.
The Food ministry has proposed a cash subsidy of Rs 2,000 per tonne, while the agriculture ministry wants Rs 3,500 a tonne for exports of four million tonnes of raw sugar in the next two years.
A Committee of Secretaries of ministries concerned would rework the quantum of subsidy tomorrow and the proposal is likely to come before CCEA later this week.
"The proposal was taken up for discussion. But a decision was postponed," Food Minister K V Thomas told reporters after the CCEA meeting.

"Our proposal is Rs 2,000 per tonne of export subsidy on raw sugar. The Agriculture Ministry wants Rs 3,500 per tonne. The quantum of subsidy would be re-calculated," he said.
The Committee of Secretaries of food, agriculture, commerce and finance ministries would meet tomorrow to re-calculate the subsidy of raw exports, he added.

That apart, the minister said, that the Commerce Ministry has also raised some concerns whether the subsidy is WTO compliant.
"The Commerce Minister was also not present in today's meeting," Thomas said citing another reason for deferring a decision.
Another minister present in the meeting said: "There is going to be some further little consultation between the Food Minister and the Agriculture Minister. I think it (proposal) will be come back on Thursday (in CCEA)."

Thomas said the subsidy would be Rs 800 crore on the basis of food ministry's proposal of Rs 2,000 per tonne, while the exchequer would have to bear Rs 1,400 crore if Agriculture Ministry's demand is considered.
The Food Ministry has proposed a cash incentive to sugar mills for exports of 4 million tonnes of raw sugar in two years as the industry is facing a liquidity crunch with prices of sweetener being lower than the cost of production.
Sugarcane price arrears to farmers has reached about Rs 10,000 crore from about Rs 3,000 crore at the start of the current marketing year in October 2013.

In December, government had approved Rs 6,600 crore interest-free loan to sugar industry for making payment to sugarcane farmers.
India is the world's second largest sugar producer and biggest consumer. Production is estimated at 25 million tonnes in the 2013-14 marketing year (October-September) as against 25.1 million tonnes in the previous year.
The annual domestic consumption is seen at 23.5 million tonnes.