The high-level inter-ministerial meeting convened here today by Prime Minister Atal Behari Vajpayee to find a solution to the current crisis in the sugar sector ended in a stalemate with the finance ministry resisting the bail-out measures having financial implications.
Exemption of sugar from all levies, including state taxes, and liberal incentives for export and freight subsidy to north-eastern states were among the measures the finance ministry was reluctant to accept. In all, about a dozen-odd measures, mostly suggested by the food and consumer affairs ministry, were considered at the meeting, it is learnt.
The meeting was attended by deputy Prime Minister L K Advani, finance minister Jaswant Singh, food and consumer affairs minister Sharad Yadav and Planning Commission deputy chairman K C Pant, besides the Prime Minister who presided over it.
Vajpayee is understood to have asked the finance ministry to have a re-look at the proposals. The tax exemption proposal seeks to waive all taxes on sugar, including those levied by states, for five years, to mitigate liquidity problem of sugar factories. The industry had demanded such an exemption for two years.
Another proposal discussed at the meeting pertained to the grant of priority sector status to sugar industry. Another suggestion was to create a development fund for sugar through a development cess.
Pricing of ethanol for blending with petrol and diesel and incentives for co-generation of power in sugar factories, besides for creation of additional capacity, were also reviewed.
It was suggested that minimum support price of sugarcane be fixed on basis of average recovery in season rather than the fixed 8.5 per cent recovery norm as at present.
The basis for financial allocation for the proposed sugar buffer of two million tonnes was debated. A section of industry has opposed the food ministry
