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The beleaguered sugar sector is in crisis due to the surplus stock of sugar, mounting cane arrears and no increment in the minimum selling price. In good news to the sugar industry ahead of Lok Sabha polls, the government is likely to announce a hike in a minimum selling price (MSP).
Lok Sabha election is around the corner, and the crisis in the sugar industry can majorly affect the electoral calculations of BJP as sugarcane growers are one of the major vote banks along with sugar mills.
As per information available, in a meeting of CoS, a proposal was discussed to hike in MSP. Now it is fixed at Rs 29/kg, which may increase upto Rs 31/kg. On the other hand, sugar mills are not satisfied with the predicted hike upto Rs 31/kg as they claim that their production cost goes beyond this. They are demanding hike in the MSP upto Rs 35/kg, but the government may not go ahead with it as Lok Sabha election is approaching.
It has been more than two months of crushing commencement, but many mills have not yet paid the pending cane arrears. The rule mandates that FRP amount should be deposited to the farmers’ bank accounts within 14 days after the sugarcane harvest is handed over to the factory owners, but millers failed to do so. Factory owners have expressed helplessness in paying the arrears owing to the fall in the price of sugar and other various factors.
According to ISMA, it was estimated that cane price arrears across the country had reached about Rs 20,000 crore at the end of January 2019.
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