Production subsidy of Rs 5.5 per quintal for sugarcane farmers has been approved by the government to help cash-starved millers clear cane arrears that have surged to about Rs 20,000 crore due to sharp fall in sugar prices on record production, here on Wednesday.
The Cabinet Committee of Economic Affairs has approved a production-linked subsidy of Rs 55 per tonne (Rs 5.5 per quintal) for cane farmers, sources said.
Industry body ISMAs Director General Abinash Verma said, the subsidy amount could be Rs 1,500-1,600 crore on the basis of sugarcane crushed by the mills in the current 2017-18 marketing year (October-September).
Sugar output of India, the worlds second largest producer, stood at 20.3 MT in the 2016-17 marketing year. The annual domestic demand is estimated at 25 MT.
“Sugarcane arrears have touched about Rs 19,000 crore. We discussed this issue. There were several suggestions like production-linked subsidy, sugar cess and reduction of GST on ethanol from 18 per cent to 5 per cent,” Food Minister Ram Vilas Paswan had told reporters on April 23 after the ministerial panel meet.