ADVERTISEMENT

Cabinet defers decision on sugar export subsidy for third time

The Cabinet Committee on Economic Affairs (CCEA) on Tuesday deferred a decision on giving subsidy for export of raw sugar for the third time as differences between the Agriculture and Food Ministry remained unresolved.

"The CCEA has deferred the decision on sugar export subsidy for tomorrow because more consultation is required," Food Minister K V Thomas told reporters after the meeting which ran for two hours.

Sources said there were "prolonged discussions" between Mr Thomas and Agriculture Minister Sharad Pawar on ways to calculate the quantum of subsidy.

The Food Ministry had originally proposed a subsidy of Rs 2,000 per tonne on export of four million tonnes of raw sugar for two years, while the Agriculture Ministry was in support of Rs 3,500 per tonne.

The differences between the two ministries forced the CCEA to defer the decision on this matter twice last week. It had asked the ministries concerned to rework the subsidy.

Accordingly, an informal group of ministries (IGoM) had met last week and agreed on giving a subsidy of Rs 3,500 per tonne on export of 4 million tonnes of raw sugar costing the exchequer Rs 1,400 crore.

Contrary to the IGoM's decision, the Food Ministry moved a proposal suggesting Rs 2,800 per tonne as subsidy.   

Justifying the proposal, Mr Thomas on Tuesday said, "We have arrived at Rs 2,800 per tonne subsidy based on scientific data."

The Food Ministry has proposed a cash incentive to sugar mills for exports of raw sugar as the industry is facing a liquidity crunch with prices of sweetener being lower than the cost of production.

Sugarcane price arrears to farmers has reached about Rs 10,000 crore from about Rs 3,000 crore at the start of the current marketing year in October 2013.

In December, the government had approved Rs 6,600 crore interest-free loan to the sugar industry for making payment to sugarcane farmers.

India, the world's second biggest sugar producer, is sitting on huge opening stock of the sweetener.

Moreover, the output in the current 2013-14 marketing year (October-September) is also expected to be higher at 25 million tonnes, against the demand of 23.5 million tonnes.