New Delhi: In a move aimed at helping loss-making mills and millions of cane growers, the Union Cabinet, chaired by PM Narendra Modi, on Wednesday approved a Rs 7,000 crore bailout package for the sugar industry.
This includes creation of buffer stock of 30 LMT of sugar for one year and to incur estimated expenditure of Rs 1175 crore for this purpose. "The reimbursement under the scheme would be made on quarterly basis which would be directly credited into farmers’ account on behalf of mills against their cane price dues," an official statement said.
Cabinet has also decided to set the minimum selling price at Rs 29 per kg which can be revised by DFPD subsequently based on revision of FRP. Government will put in place a mechanism to ensure that the retail prices of sugar are kept fully under control. At present, this would be done along with imposition of stock holding limits on sugar mills. The stock limit on mills will be initially imposed for the current sugar season (up to September 2018), which may be reviewed by DFPD at any time.
A bailout package has been worked out as sugar mills' financial health has worsened due to sharp fall in prices following a record sugar production of over 31.6 million tonnes so far in the 2017-18 marketing year (October-September).
Last month, the government had announced a Rs 1,500 crore production-linked subsidy for sugarcane farmers to help millers pay cane payments.
Presently, the average ex-mill price of sugar is in the range of Rs 25.60-26.22 per kg, which is below the cost of production.
The Centre has already doubled sugar import duty to 100 per cent and scrapped export duty to check sliding domestic prices. It has also asked mills to export 2 million tonnes of sugar.
With PTI Inputs