NEW DELHI: As the cane arrears crisis continues to intensify, the central government made it clear on Tuesday that a relief package of around Rs 8,000 crore was on the way. According to farmers’ estimates, nearly Rs 22,000 crore of cane payments are still due to them but cash-starved mills have been unable to meet requirements.
While speaking to reporters on his ministry’s achievements, Union Minister Ram Vilas Paswan said, “A proposal of Rs 8,000 crore has been sent to the Cabinet. Cabinet will take a decision.”
According to sources, the bailout package will come just days after the BJP lost Lok Sabha bypoll in Kairana constituency in Uttar Pradesh, the country’s largest sugarcane producing state. The anger of unpaid sugarcane farmers is attributed as a major reason for the ruling BJP having lost the by-election in a state where it had won the assembly polls handily as early as 2017.
However Paswan refuted any links between the package and the by-poll loss. The Rs 8,000-crore package will include provisions for the creation of a sugar buffer stock of 3 million tonnes, interest subsidy on Rs 4,500 crore loan to mills for expansion and creation of new ethanol capacity among others.
Just last month, the government had announced a Rs 1,500 crore production-linked subsidy for sugarcane farmers to help millers pay cane payments.
The current crisis in the sugar sector is primarily due to a substantial glut in the domestic market, which in turn has brought mill prices of sugar below the cost of production resulting in massive losses. Currently, the average ex-mill price of sugar is in the range of Rs 25.60-26.22 per kg.
The current package will be in addition to the measure she government had already taken, like doubling the import duty for sugar to 100 per cent and removed export duties. It has also asked mills to export 2 million tonnes of sugar.