Sops to sugar firms after EC nod

The Centre will announce export subsidies for sugar companies and creation of buffer stock only after approval of the Election Commission in the wake of the forthcoming Uttar Pradesh Assembly polls, a government official said today.

The model code of conduct for the polls, which prohibits any new policy announcements, is already underway in Uttar Pradesh, which is one of the largest sugar producing states.

The official said the decision on export subsidy to sugar companies was taken by the Cabinet Committee on Economic Affairs Saturday, but an announcement to the effect would be made after the approval from the Election Commission.

Separately, asked about the Cabinet panel's decision on sops to sugar companies, Food Secretary T Nand Kumar said, "Everything after the approval of the Election Commission".

"We have already sent the file for approval," the official said.

The Cabinet Committee on Economic Affairs decided to provide transport reimbursements for sugar exports and create a buffer stock for the commodity, the official said.

An export subsidy of Rs 1,350 a tonne has been 'tentatively' fixed for sugar mills in the coastal areas, while for those in non-coastal regions it is Rs 1,450 a tonne, officials said.

A sugar buffer stock of 2 million tonne is also likely to be created by the government for two years.

The industry has been clamouring for export sops and creation of sugar buffer stock in the wake of higher output estimates and falling prices.

On Thursday, Agriculture Minister Sharad Pawar said the country's sugar output in 2006-07 (October-September) is likely to top 25 million tonne. The country had produced 19.3 million tonne of the sweetener last year.

Wholesale prices have slipped from Rs 1,900-2,000 a quintal in October to Rs 1,400-1,500 currently.

Officials also said a decision to remove the quantitative limit on sugar exports under Open General Licences has also been taken.

In a notification issued January 24, the government had imposed quantitative limits on sugar exports under the Open General Licence, to be reviewed from time to time depending on the domestic availability of the commodity.

Though the notification had not detailed the export limit, officials had said exports under OGL would be restricted at 750,000 tonne.

The Centre had revoked the ban on sugar exports on January 11. A blanket ban on sugar exports was imposed in June to keep a check on domestic supplies and prices, and tame inflationary pressure.