 "Govt could bring back sugar release order")
The dues, over Rs 19,000 crore as on March 31, might spiral further unless sugar prices stop falling. A consensus to this effect seems to have emerged after a meeting of key ministers on Tuesday. A final decision on the economic cost of the proposed measure is expected to be taken by the finance ministry, after possible consultation with the Prime Minister’s Office.
Under the RO mechanism, the central government decided how much sugar each mill in the country could sell in the open market. It was discontinued a few years earlier.
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The meeting was attended by Food Minister Ram Vilas Paswan, Transport Minister Nitin Gadkari, Agriculture Minister Radha Mohan Singh, Commerce Minister Nirmala Sitharaman, Petroleum Minister Dharmendra Pradhan, Women and Child Development Minister Maneka Gandhi and Minister of State for Agriculture Sanjeev Balyan.
Officials said an executive order was also likely for raising the import duty on sugar from the existing 25 per cent to 40 per cent.
“A lot of issues were discussed during the two-day meeting between farmer leaders and representatives of state governments on issues concerning the sugar sector. These were once again taken up today and we have zeroed in on a few of these,” a senior official said.
The sugar industry is finding a difficulty in paying the cane price (set by states) to farmers as mills have been incurring losses for the past few years, due to low realisation and high cost of production.
The Centre recently provided a subsidy of Rs 4,000 a tonne for export of 1.4 million tonnes (mt) of raw sugar, to improve the cash position of millers.
The Indian Sugar Mills Association has been demanding that the government also create a buffer stock of at least two mt and restructure millers’ debt of Rs 36,000 crore. Ex-mill prices of sugar have fallen to Rs 21-24/kg in the country, while the cost of production is over Rs 30/kg.
Sugar production in India, the world’s second largest producer, is estimated to be higher than the domestic consumption for a fifth year in a row this season. The government has estimated output at 26.5 mt for the 2014-15 marketing year (October-September), as against 24.3 mt in 2013-14. Annual domestic demand is about 24.8 mt.
FOR THE SAKE OF FARMERS
- The government might bring back the release order mechanism to address sugarcane dues
- It could also create a buffer stock to absorb surplus sugar
- It might raise the import duty on sugar to 40% from 25% now
- Final call likely after nod from finance ministry and PMO
- Sugarcane dues to farmers were Rs 19,000 cr as on March 31, 2015