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New Delhi (PTI): The government Thursday hiked the benchmark price of sugar sold at factory gate by Rs 2 to Rs 31 per kg to boost the liquidity of millers and help them clear arrears of sugarcane farmers ahead of the Lok Sabha polls.
The decision could push the retail price of sugar slightly higher, Food Minister Ram Vilas Paswan said, but added that it would not have a major impact on consumers.
With few months left before the general election, the BJP-led central government is trying to address farmers’ issues. The Budget for 2019-20 announced a direct income support of Rs 6,000 per year to around 12 crore small and marginal farmers.
“We have raised the minimum selling price (MSP) to Rs 31 per kg which will help millers make cane payment to farmers. Millers were complaining that the current rate of Rs 29 per kg was very low and they were making losses,” Paswan told reporters here.
MSP is the rate below which the mills cannot sell sugar in the wholesale market and to bulk consumers like beverage and biscuit makers.
The move comes following demands from the industry and representation made by NCP chief and former agriculture minister Sharad Pawar to Prime Minister Narendra Modi.
Paswan said the MSP was raised in view of the rising sugarcane arrears of farmers.
“The cane arrear has reached Rs 20,167 crore till February 13 of this year. Out of which, the cane arrear on the basis of FRP (central price of sugarcane) is about Rs 18,157 crore,” the minister said.
Cane arrear is the highest in Uttar Pradesh at Rs 7,229 crore, followed by Maharashtra (Rs 4,792 crore) and Karnataka (Rs 3,990 crore) till February 13 of the 2018-19 marketing year.
Asked about its impact on retail price, Paswan said, “The average selling price of sugar in retail market is Rs 35-38 per kg. If the rate increases to Rs 40 per kg, it will not adversely affect the consumers.”
“There will not be much impact as 70 per cent of the sugar is used by bulk consumers,” he said, adding that the government will monitor the price situation.
On an average, about 20-21 lakh tonnes of sugar is sold on monthly basis.
A senior food ministry official said the Rs 2 per kg hike in sugar selling price will have an incremental impact of Rs 5,000 crore by March-end.
The price has been revised upward by Rs 2 per kg following the direction from the committee of secretaries, Paswan added.
The minister also said a mechanism will be put in place to ensure the benefit given to the industry is passed on to the sugarcane farmers.
On exports, he said about 8 lakh tonnes of sugar have been exported so far in the current year, while 16 lakh tonnes have been contracted under the mandatory export quota of 5 million tonnes.
In the last few years, the government has taken several measures to help cash-starved mills clear cane dues. These include increase in import duty on sugar to 100 per cent, scrapping of export duty, creation of buffer stock, and subsidy for mandatory export of 5 million tonnes in the 2018-19 marketing year.
The Centre is also giving loans at subsidised interest rates for setting up of ethanol capacity.
As per the Indian Sugar Mills Association (ISMA), sugar production rose 8 per cent to 185 lakh tonnes in the first four months of this marketing year ending September.
The production, however, is estimated to decline to 307 lakh tonnes in 2018-19 marketing year (October-September) from record 325 lakh tonnes in the previous year, it added.
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