The Union Cabinet on Wednesday approved a Rs 6,268-crore subsidy for export of 60 lakh tonnes of sugar during the 2019-20 marketing year starting October, in order to liquidate surplus domestic stock and help mills in clearing huge sugarcane arrears to farmers.
The decision, meant for the sugarcane season for the current year involving an export subsidy of Rs 10,448 per metric tonne to sugar mills, comes in the backdrop of upcoming polls in Maharashtra, Jharkhand and Haryana.
Maharashtra and Haryana are among the top sugarcane producing states. India has 162 lakh tonnes of sugar stock. Of this, 40 lakh tonnes is buffer stock and 60 lakh tonnes are meant for export.
After the Cabinet meeting, Information and Broadcasting Minister Prakash Javadekar said that the government has taken an important decision in the interest of sugarcane farmers. “This will benefit millions of farmers in Uttar Pradesh, Maharashtra and Karnataka as well as other states,” he said. The government is providing subsidy for export of 50 lakh tonnes of sugar for the current 2018-19 marketing year.
“The subsidy will be transferred directly to the farmer’s account on behalf of the mills against cane price dues and subsequent balance, if any, would be credited to mill’s account. The direct transfer will potentially curb pilferage and directly reach the farmers. The sugar season 2019-20 is expected to start with an opening and closing stock of 142 MT and 162 MT respectively,” officials said.
The announcement is expected to give a boost to BJP’s support base among farmers in Maharashtra, Jharkhand, Haryana and Delhi. In a major outreach initiative to address the concerns of the farming community, which cost the BJP three state elections last December, the NDA government extended the scope of the Pradhan Mantri Kisan Samman Nidhi, or PM-Kisan scheme, to include all the 145 million farmers across the country, besides announcing a Rs 3,000 monthly pension scheme for 125 million small and marginal farmers.
To deal with this situation, the government has recently created buffer stock of 40 lakh metric tonnes of sugar for one year from August 1, 2019. However, even after taking into account this buffer stocking of 40 lakh metric tonnes till July 31, 2020 and likely diversion of sugar by way of production of ethanol from B-heavy molasses/cane juice during 2019-20 and requirement of normative stock for two months, there shall be about 60 lakh metric tonnes of excess sugar stock that will need evacuation through export.