In the first ever direct subsidy payment to farmers, the government today decided to pay sugarcane growers Rs 4.50 per quintal for the cane they will sell to loss-making millers, a move that will cost Rs 1,147 crore to the exchequer.
The Cabinet headed by Prime Minister Narendra Modi decided to give a production-linked subsidy directly to cane growers, as export subsidy, which was provided in the last two sugar seasons 2013-14 and 2014-15 to millers, was questioned by many countries at the WTO.
The decision was hailed by the industry body ISMA, which said that millers' cane price liability would reduce by about Rs 1,100 crore, thus partly compensating their losses.
Also Read
Sugar mills are facing a liquidity crunch due to surplus output that lead to low retail prices of the sweetener.
"To further ensure timely payment of cane dues in the current sugar season, the government has decided to provide a production subsidy at the rate of Rs 4.50 per quintal of cane crushed to offset cane cost," an official release said.
The subsidy would be paid directly to farmers on behalf of millers and adjusted against the cane price payable to farmers towards FRP, including arrears of previous years.
The remaining balance, if any, would be credited into the millers' account, it said, adding that priority will be given to settling cane dues arrears of the previous years.
The Centre has fixed Fair and Remunerative Price (FRP), the minimum price that mills have to pay to cane farmers, at Rs 230 per quintal for the 2015-16 season (October-September). With the subsidy being borne by the government, mills will now have to pay only Rs 225.5 a quintal to farmers.
