Rs 2 per kg hike in MSP to improve sugar mills' cash flow: Report

Additional inflow of funds is set to reduce cane arrears, which surged to Rs 20,000 crore in January

The Rs 2-a-kg hike in the minimum selling price (MSP) of sugar is set to increase the cash flow by Rs 3,000-3,500 crore for the industry in the sugar season of 2018-19 (Oct–Sep), says a report from India Ratings and Research.

Recently, the Centre raised the MSP to Rs 31 a kg effective immediately from the existing Rs 29 to help sugar mills narrow the gap between domestic prices and the cost of production. Mills claim their average cost of sugar production is Rs 35 a kg across the country.

“The recent hike in MSP of sugar could generate an additional income