 "CCEA clears Rs 3,333 a tonne raw sugar export subsidy")
Food Minister K V Thomas told PTI the finance ministry would be consulted to ensure the framework of the subsidy complied with World Trade Organization norms. The subsidy would be paid through an escrow account.
The decision, deferred thrice because of a disagreement between the agriculture and food ministries over the amount, was finally taken after a compromise, a senior official said, adding the matter might be brought back to the Cabinet in April.
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At a subsidy of Rs 3,333 a tonne, the government would incur an expenditure of about Rs 1,300 crore on the export of four million tonnes (mt) of raw sugar through the next two years, provided the subsidy isn't changed in April.
Officials said in its revised proposal, the food ministry had favoured raising the subsidy from Rs 2,000 a tonne to Rs 2,800 a tonne, with prospective effect. But if the subsidy is provided from October 1, 2013 (the beginning of the 2013-14 sugar season), it should be capped at Rs 2,000 a tonne. The subsidy was for the export of four mt of raw sugar for two years.
The agriculture ministry had struck to its assessment that any subsidy below Rs 3,500 a tonne wasn't feasible, as international prices of raw sugar were much lower than the cost of production in India.
Last week, the CCEA had deferred a decision on granting the cash subsidy because of differences over the amount of subsidy. Following this, a few meetings were held between Thomas and Agriculture Minister Sharad Pawar, as well as between officials of the food, agriculture and finance ministries. However, no conclusion was reached. Subsequently, the matter was refereed to the CCEA. Subsidy of Rs 2,000 a tonne would have cost the exchequer Rs 800 crore, while subsidy of Rs 3,500 tonne will cost it Rs 1,400 crore.
The subsidy will be adjusted from the Sugar Development Fund through two years. The export subsidy is part of a package to bail out the sugar sector, which has been facing losses due to mounting cane arrears and falling prices.
The Indian Sugar Mills Association has welcomed the decision.