 "Sugar industry representatives meet Jaitley, Rajan on their woes")
The representatives asked the government to adopt a report of the Commission for Agriculture Costs and Prices (CACP) that recommended that the industry pay a price derived based on a revenue sharing formula and if this was lower than the fair and remunerative price (FRP), the difference be transferred directly to farmers’ bank accounts.
A scheme on similar lines was adopted this year, where the Centre transferred Rs 4.50 per quintal directly to farmers. The sector wants this scheme to be made permanent in a more structured manner.
Representatives claimed despite improvement in prices and steps taken by the Centre, the sector has not come out of the woods. The sector’s debt burden rose four times to around Rs 40,300 crore in March 2015, from Rs 11,000 crore in March 2008.
“We have requested the finance minister and RBI governor to allow the sector permission to restructure loans under the 5:25 flexible structure, currently available for core industries and infrastructure sectors,” Tarun Sawhney, president of Indian Sugar Mills Association, said.
The Centre can fund the shortfall from a stabilisation fund, which can be financed by raising cess on excise duty to Rs 200 a quintal or Rs 2 a kg. At present, the Centre levies a cess of Rs 125 a quintal or Rs 1.25 a kg.
“This would be levied only if prices are below a certain threshold limit. If prices stay firm, the cess is not levied,” Abinash Verma, ISMA director general, said.
Sawhney said any move to raise the cess by Rs 0.75 a kg won’t push up prices as almost 70 per cent of India’s annual consumption comes from the industrial sector.
Verma said the Centre would earn Rs 4,500 crore a year if the cess is raised to Rs 200 per quintal.
Of this, the total outgo on bridging the gap between FRP and revenue-fixed price would be lower.
He said a sub-category could be created under the Sugar Development Fund for the price stabilisation fund in which this amount could be deposited.