NEW DELHI: The Cabinet Committee on Economic Affairstoday did not take up the proposal to give a cash subsidy of Rs 2,000 per tonne for export of 4 million tonne of raw sugar for a period of two years.
“Due to paucity of time, the sugar proposal could not be taken up for discussion,” Food Minister K V Thomas told PTI after the meeting.
In the Cabinet note, the Food Ministry has proposed cash incentive of Rs 2,000 per tonne for the beleaguered sugar industry for exporting 4 million tonne raw sugar. The total subsidy outgo has been pegged at Rs 800 crore spread over two years to be adjusted from the Sugar Development Fund (SDF).
But the Agriculture Ministry has a different view on the quantum of subsidy although the incentives proposed by the Food Ministry are in line with the recommendation made by a high-level informal group of ministers, headed by Agriculture Minister Sharad Pawar.
Sources said Pawar is in favour of an incentive not less than Rs 3,500 per tonne to encourage production and export of raw sugar amid weak global price situation. Industry body ISMA has also suggested an incentive of Rs 3,500.
Currently, raw sugar exports from India are not viable as global prices are ruling much lower than the domestic production cost of Rs 26,500 per tonne.
India, the world’s second biggest sugar producer but largest consumer, does not manufacture raw sugar for domestic consumption. It only makes white sugar for the home market.
Sugar mills are facing cash crunch as sugar prices have come down below the cost of production in view of surplus supplies. They are also saddled with huge cane arrears.
To improve the cash flow of sugar mills, the government has already announced interest subsidy on bank loans to be availed of by them exclusively for paying cane farmers. This has been done in line with the recommendation of the Pawar- headed panel.