With an eye on the upcoming Assembly polls in five States this year and Lok Sabha polls in 2019, the Narendra Modi Government on Wednesday approved a Rs 5,500-crore package for the sugar industry.
This includes over two-fold jump in production assistance to cane growers and transport subsidy to mills for export up to 5 million tonnes in the marketing year 2018-19.
The total package is of Rs 5,538 crore, of which Rs 1,375 crore pertains to transport subsidy to millers and the remaining amount will be credited to sugar cane growers as production aid. This has come a day after the UP Government announced a slew of measures for sugar cane farmers and set November 30 as the deadline for private sugar millers to settle cane dues.
The BJP has been concerned about wooing the sugar cane farmers after the defeat of the party in the sugar belt of Kairana (UP) in May Lok Sabha bypolls.
This is the third incentives to politically significant sugarcane sectors in the past four months.
The Cabinet Committee on Economic Affairs (CCEA) approved the Food Ministry’s proposal that seeks to address the surplus domestic stock of sugar and help mills in clearing huge cane arrears of around Rs 13,000 crore.
The CCEA approves the total assistance of Rs 5,500 crore to support the sugar sector by wake of offsetting cost of cane and to facilitate export of sugar from the country, thereby improving liquidity of the industry enabling them to clear cane price arrears of farmers. The Cabinet approved giving transport subsidy of Rs 1,000 per tonne for the mills located within 100 km from ports, Rs 2,500 per tonne for mill located beyond 100 km from the port in coastal States and Rs 3,000 tonnes per tonne for mill located in other than coastal States.
With Assembly elections due in some States and upcoming general polls in mid-2019, the Modi Government wants to address cane growers payment issue. To woo distressed farmers, the Government had assured farmers in the Budget for 2018-19 that it would increase minimum support prices (MSPs) for the summer-sown season so that they get 50 per cent returns over cost. A crash in the prices of several farm commodities, especially pulses and oilseeds, in recent months has led to distress in the rural economy and triggered farmers’ protests in several States. Farmers have earned negative returns on many crops amid record harvests.
Cane dues stood alarmingly high at Rs 14,845 crore as of mid-August, a record for this time of the year (Uttar Pradesh alone made up for over 70 per cent of the arrears).
The industry is facing a glut-like situation because of record production of 32 million tonnes (MT) in the 2017-18 marketing year (October-September), resulting in a closing stock of 10 MT at the end of this month.