You are here: Home » Economy & Policy » News
Business Standard

Cabinet to consider Rs 45-bn package for cash-starved sugar industry today

The government has taken a slew of measures to bail out cash-starved sugar mills as well as cane farmers in the last one year

Sugarcane Arrears  |  Sugar Industry

Press Trust of India  |  New Delhi 

UP sugar mills, cane farmers, Uttar Pradesh government, UP , gur, Jaggery, Khandsari, sugar mills, Yogi Adityanath government , sugar farmers, sugar cultivation, sugar factory,
The minimum selling price of the sweetener has been fixed at Rs 29 per kg

The Union Cabinet is likely to consider Wednesday a Rs 45 billion plan to more than double the production assistance paid to sugarcane farmers and transport subsidy to mills exporting the sweetener, sources said.

The proposal to raise production assistance to Rs 13.88 per quintal to farmers and transport subsidy to mills for exports of five million tonnes of surplus sweetener is part of government plan to clear more than Rs 135 billion arrears sugar mills have towards farmers.

In June, the government had announced Rs 85 billion package for the cash-starved industry, which is facing a glut-like situation because of record 32 million tonnes of sugar production in the current 2017-18 marketing year ending this month.

Sugar output is set to increase further to 35 million tonnes in the next marketing year as against the domestic demand of 26 million tonnes. The opening stock of sugar is estimated at 10 million tonnes on October 1, next month.

According to sources, the Cabinet Committee on Economic Affairs (CCEA) will take up the food ministry's proposal Wednesday under which production subsidy to farmers has been increased to 13.88 per quintal for 2018-19 from Rs 5.5 in the current marketing year.

Moreover, the ministry has proposed a mandatory export of 5 million tonnes of sugar and offered a subsidy of up to Rs 3,000 per quintal for transport and handling as global prices are unviable for shipments. This subsidy will be based on the distance of mills from ports.

Sources said the government will have to bear about Rs 45 billion on account of these measures to help sugar mills and cane farmers. These steps will enable mills to export sugar and clear cane arrears, which currently stand at Rs 135.67 billion. Mills in Uttar Pradesh owes the maximum at Rs 98.17 billion to cane farmers, they added.

The government has taken a slew of measures to bail out cash-starved sugar mills as well as cane farmers in the last one year.

First, it doubled the import duty on sugar to 100 per cent and then scrapped the export duty on it. It also made it compulsory for millers to export two million tonnes of sugar even as the global prices were low.

With mounting cane arrears, the government in June announced Rs 85 billion package for the industry and creation of buffer stock. The package included soft loans of Rs 44.4 billion to mills for creating ethanol capacity. It will bear an interest subvention of Rs 13.32 billion for this.

The Centre had also announced an assistance of Rs 5.50 per quintal of cane crushed, amounting to Rs 15.4 billion, to mills. Around Rs 12 billion was allocated for the creation of 3 million tonnes buffer stock of sugar.

The minimum selling price of the sweetener has been fixed at Rs 29 per kg.

Last week, the government approved an over 25 per cent hike in the price of ethanol produced directly from sugarcane juice for blending in petrol in a bid to cut surplus sugar production and reduce oil imports.

The CCEA raised the procurement price of ethanol derived from 100 per cent sugarcane juice to Rs 59.13 per litre from the current rate of Rs 47.13.

The price for ethanol produced from B-heavy molasses (also called as intermediary molasses) was hiked to Rs 52.43 a litre from the current Rs 47.13 but that for ethanol produced from C-heavy molasses was reduced marginally to Rs 43.46 from Rs 43.70.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Tue, September 18 2018. 20:00 IST