New Delhi, Sep 26: The Union Cabinet Committee on Economic Affairs chaired by Prime Minister Narendra Modi on Wednesday approved a Rs 5,500 crore package for the sugar industry to offset cane arrears and to facilitate export of sugar by millers to improve their liquidity position.
This is the second package announced in four months by the government to solve the liquidity problem of the sugar industry and enable it to pay cane arrears to farmers. Announcing the decision, Union Finance Minister Arun Jaitley said that due to excess carryover stocks and indication of similar excess production in the ensuing sugar season 2018-19, the liquidity problem of the sugar mills is likely to persist in the coming sugar season too.
'As a result, cane price arrears of sugarcane farmers may also peak at unprecedented high level,' he said. The package announced on Wednesday includes transport subsidy, freight, handling and other charges to facilitate export for mills amounting to Rs 1,375 crore which will be borne by the central government. An estimated 5 million tonnes of sugar is likely to be exported.
To help mills clear cane dues of farmers, which were as high as Rs 23,232 crore in May, the CCEA approved a financial assistance of Rs 13.88 per quintal of sugarcane crushed during sugar season of 2018-19 to mills to offset the cost of cane.
The total expenditure on this account would be about Rs 4,163 crore which will also be borne by the central government.To ensure payment of sugarcane dues of farmers, both the assistance would be credited directly into their bank accounts on behalf of sugar mills, against cane price and arrears payable to farmer.Subsequent balance, if any, would be credited to mill’s account.
This is the second financial bail-out package to the sugar industry after Rs 8,500 crore was announced in June. The industry is facing a glut-like situation because of record production of 32 million tonnes) in the 2017-18 marketing year (October-September).
The carryover stock is 10 million tonnes at the end of this month with sugar production expected to be 35 million tonnes in the next marketing season leaving surplus stocks. Internal requirement is estimated at 26 million tonnes. Besides, hike in ethanol price, the government also created a buffer stock of 30 lakh tonnes of sugar for which it will bear the carrying cost of Rs 1,175 crore. (UNI)