Sugar subsidy, export target pegged higher
The decision was taken at a meeting of the Cabinet Committee on Economic Affairs (CCEA), headed by Prime Minister Narendra Modi.
New Delhi: Giving much-needed relief to stressed sugarcane farmers, the government on Wednesday announced Rs 6,268-crore subsidy for exporting 6 million tonnes of sugar during the marketing year 2019-20 that starts from October. The measure is expected to liquidate surplus domestic stocks and help mills clear huge sugarcane arrears to farmers.
The decision was taken at a meeting of the Cabinet Committee on Economic Affairs (CCEA), headed by Prime Minister Narendra Modi. “The proposed subsidy would be directly credited into farmers’ account on behalf of mills against cane price dues and subsequent balance, if any, would be credited to mill’s account,” Information and Broadcasting Minister Prakash Javadekar told reporters.
As per a senior Agriculture Ministry official, for the current marketing year 2018-19 that ends next month, the government had announced a subsidy of Rs 4,500 crore for exporting of 5 million tonnes of sugar. With a month to go, the exports in the current marketing year have reached more than 3.8 million tonnes till now. “We expect the exports to touch 4 million tonnes this marketing year,” the official said.
India raising the export target to 5 million tonne from 2 million tonne in the previous year has annoyed sugar producing countries like Brazil and Australia, which have moved the WTO, alleging that India is distorting the world sugar market.
In a statement, the government, however, asserted that the export subsidy on sugar is WTO compatible and as per the Agreement on Agriculture (AoA).
Javadekar said, “A lump sum export subsidy of Rs 10,448 per tonne will be given to sugar mills in the 2019-20 marketing year (October-September), costing the exchequer Rs 6,268 crore as subsidy."
It is expected that this will benefit millions of farmers in Uttar Pradesh, Maharashtra, Karnataka and other states.
The lump-sum export subsidy will be provided to millers to meet expenses on marketing costs including handling, upgrading and other processing costs as well as international and internal transport and freight charges.
The subsidy would be credited into farmers' accounts on behalf of mills against cane price dues and any balance would be credited to mills' account.
In wake of surplus sugar production during sugar seasons (Oct-Sep) in 2017-18 and 2018-19, the government said, the ensuing sugar season 2019-20 is expected to commence with an opening stock of about 14.2 million tonnes and season-end stocks are expected to be about 16.2 mt.
It also said the surplus stock would have created a downward pressure on ex-mill sugar prices, affecting liquidity of mills and mounting of cane arrears.
The National Federation of Co-operative Sugar Factories Ltd hailed the government decision. Its Managing Director Prakash P Naiknavare said, "This is a good decision taken at a right time. There is an inventory of 43.5 million tonnes in the country. Unless exports takes place, there is no way out. Now the ball is in the court of the industry how best they utilise this."
He said the export subsidy for the current year was around Rs 11,000 per tonne, which was linked to crushing of sugarcane. However, the export subsidy announced for 2019-20 at Rs 10,448 per tonnes is linked to marketing and other expenses, which is WTO compatible.
The Indian Sugar Mills Association said it sees additional cash flows of Rs 18,000 crore from the move.