Pawar says sugar bailout package worth only Rs 4K cr, asks PM to take more measures

Stating that the bailout package announced for the sugar industry recently was worth only Rs 4,047 crore and not Rs 8,500 crore, NCP chief and former agricutlure minister Sharad Pawar has shot off a letter to the prime minister seeking urgent steps to help cash-starved mills to clear part of over Rs 22,000 crore dues to cane farmers.

Pawar sought increase in the ex-mill price of the sweetener from Rs 29 per kg, an export policy to ship 80 lakh tonnes sugar by doubling production-linked subsidy to Rs 11 per quintal, hike in ethanol price to Rs 53 per litre and restructuring of outstanding past loans with moratorium of three years.

On June 6, the Centre had announced a Rs 8,500 crore package including creating a buffer stock for sugar, enhancing ethanol production capacity and fixing a minimum selling price to cut mill losses. The package also includes Rs 1,540 crore production linked subsidy for cane growers announced last month.

Sugar mills are incurring losses as prices have fallen below production cost on account of record output of 31.5 million tonnes in the 2017-18 season ending September as against the annual domestic demand of 25 million tonnes.

"The bailout package initially published to be Rs 8,500 crore and subsequently mentioned as Rs 7,000 crore... has created confusion and ambiguity," Pawar said in the letter written to Prime Minister Narendra Modi.

If one goes by the net financial outgo on each of the decisions, the scheme for assistance to sugar mills by way of incentive on sugarcane is Rs 1,540 crore, creation of buffer stock of 30 lakh tonnes is Rs 1,175 crore and interest subvention on augmenting ethanol capacity is Rs 1,332 crore -- making the total Rs 4,047 crore, he said.

"Thus, the net financial outgo from the exchequer of the government appears to be Rs 4,047 crore and therefore, to say that the bailout package is of the magnitude of Rs 8,500 crore or Rs 7,000 crore seems to be incorrect," he noted.

Pointing out that providing interest subsidy on bank loans for ethanol capacity expansion will not address immediate problem of surplus sugar, Pawar said: "The right step will be to increase the ethanol price to at least Rs 53 per litre at distillery gate."
Pitching for higher incentive to export surplus sugar abroad, Pawar said, "...as you are aware, there is a need to push as much sugar out of the country as possible. Therefore, I insist on announcing export policy as early as possible for exporting 80-lakh tonne under MIEQ to be achieved within next 18 months for which the current cane incentive of Rs 5.50 per quintal needs to be doubled."