arrears crossing the Rs 180 billion mark, bulk of which is from the politically sensitive state of Uttar Pradesh, the Centre said on Monday that it might consider levying a cess on sugar
to the tune of 5 per cent, a production-linked export subsidy of about Rs 4.5 per kg and lower the GST on ethanol from the current 18 per cent to 5 per cent.
A high-powered panel of ministers led by Transport Minister Nitin Gadkari
discussed all the three proposals and a formal cabinet note on them is expected to be made soon.
"We might soon place all the three proposals before the cabinet," Food Minister Ramvilas Paswan
said after the high-powered meeting of which he was also a part.
The decision comes amid allegations of farmers
that despite having almost 20 per cent of sugarcane
standing in their fields, a few mills in western Uttar Pradesh have simply stopped issuing indents or have slowed them down considerably, forcing them to sell the crop to local jaggery
makers at much lower rates.
Indents are written assurances that sugar
mills issue to farmers
within their pre-demarcated areas to purchase sugarcane
from them at rates fixed by the state government.
For the 2018-19 sugarcane
marketing season, the state advised price of sugarcane
determined by Uttar Pradesh government is Rs 315 per quintal for normal varieties and Rs 325 per quintal for early sown varieties, while local jaggery
makers have been purchasing sugarcane
at around Rs 150-200 per quintal.
makers pay in cash while payment from sugar
is delayed due to mounting arrears, forcing growers to sell sugarcane
at low rates to clear fields.
Though the state government has mandated that mills have to purchase all the cane held by farmers, a sharp drop in ex-mill prices due to a bumper harvest has curbed the mills’ ability to pay cane prices to farmers
“The government had promised that it will ensure payments within 14 days of the supply of sugarcane, but the mills are not issuing indents to farmers
despite a standing crop. As a result, farmers
are unable to clear fields and sow the next crop,” said Pushpendra Singh, president, Kisan Shakti Sangh, a farmers’ group.
production in the 2017-18 season (October-September) is projected to be over 30 million tonnes, nearly 10 million tonnes more than last year, while consumption is estimated to be around 24-25 million tonnes.
In Uttar Pradesh alone, according to some estimates, sugar
mills owe almost Rs 110 billion to sugarcane farmers
as on April 17, almost double the amount due during the same period last year.
According to the Indian Sugar
Mills Association (ISMA), sugarcane
arrears nationwide have reached over Rs 180 billion till the middle of April.
“With the rise in production and supply, prices had come under severe pressure, and compared to the cost of production, the current ex-mill sugar
prices were around Rs 8 per kg lower,” the ISMA
said in a statement issued a few days ago.
Of the Rs 110 billion sugarcane
arrears in Uttar Pradesh, sources said the bulk were due by four or five major producers.
The Centre on its part, recently wrote a letter to chief ministers of all sugarcane
producing states to take strict action against defaulting sugar
mills and ensure that farmers’ payments are made on time.
The National Federation of Cooperative Sugar
Factories, the umbrella organisation of all cooperative sugar
mills in India, along with the ISMA
in a recent petition demanded that the government should immediately announce an export subsidy of Rs 1,000 per quintal to push at least 2-3 million tonnes of sugar
outside India as domestic prices have crashed sharply.
“The current international price is 25-30 per cent lower than domestic prices, thus Indian millers will comparatively lose around Rs 10 per kg on exports, making them unviable,” India Ratings
said in a note.comparatively lose around Rs 10 per kg on exports, making them unviable," India Ratings
said in a note.