Government announces Rs 8000 crore bailout package to cash-starved sugar mills

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The Union government on Monday announced a package of more than Rs 8,000 crore aimed to provide relief to sugarcane farmers and to clear their dues, officials said. The package is part of the government’s efforts to address the ongoing agrarian crisis in the country and offset its political impact.

According to a government official, the package includes three elements. A buffer stock of 30 LMT (lakh metric tonnes) of sugar will be created with Rs 1,200 crore.

This money will be directly transferred to accounts of sugarcane farmers. Rs 4,400 crore will be used to increase ethanol production to divert sugarcane away from sugar mills which are unable to dispose of their inventories. The government has also decided to ensure a minimum sale price of Rs 29/kg for sugar.

To be sure, a creation of buffer stock need not lead to the government buying sugar from the market, and might actually entail the government agreeing to bear a part of carrying cost of unsold inventories of sugar mills. A spokesperson of the Indian Sugar Mills Association declined to comment on the package citing lack of exact details.

A crisis in the sugar industry shot into limelight after the BJP’s defeat in the Kairana Lok Sabha bypoll.

The region is dominated by sugarcane farmers who have been protesting against the non-payment of dues by sugar mills. According to media reports, pending arrears of sugarcane farmers in Uttar Pradesh alone are to the tune of more than Rs 12,000 crores.

According to statistics from Centre for Monitoring Indian Economy, sugarcane production in 2017-18 was the third highest ever in the country at 35.5 million tonnes.

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