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Cabinet May Extend Buffer Stock Subsidy Scheme For Sugar

8 Aug 2020 11:44 am
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NEW DELHI (Commodities control) India’s sugar industry may expect an extension of buffer stock subsidy scheme. The Food ministry will soon move a cabinet note for extension of the scheme. The cabinet will decide on extension of the scheme. It was launched in August 2018 to support sugar mills so they can clear sugarcane dues to the farmers. The scheme was ended on 31 July.

Food Secretary Sudhanshu Pandey said on Friday that The Food Ministry will soon move a Cabinet note seeking extension of the sugar buffer stock subsidy scheme for next year. Under the scheme, a buffer stock of 40 lakh tonne of sugar was created, for which the government has reimbursed the carrying cost of about Rs 1,674 crore to participating sugar mills. The scheme was introduced in August 2018 for improving the liquidity position of sugar mills, enabling them to clear cane arrears of farmers and stabilise local sugar price.

Niti Aayog opposes extension of scheme

However, a top official of ministry of food told that a task force under the Niti Aayog in a report has recommended scrapping of buffer stock subsidy on sugar. A decision on this will be taken by the Cabinet. The ministry will move a Cabinet note in this regard.

The Niti Aayog task force has submitted its report and has recommended 10-12 recommendations. One of them is to do away with the buffer stock scheme. Therefore, the cabinet has to decide whether to extend the scheme or scrap. In its report submitted to the Prime Minister's Office (PMO), the task force has said maintenance charges given to mills act as an additional expense on the government exchequer, as the stocks are usually resold in the market the following year. It is of the view that there is no justification for the continuation of the scheme in its current form.

Sugarcane acreage increase

Meanwhile, sugar cooperative body National Federation of Cooperative Sugar Factories has sought an extension of the scheme so that millers can continue to get relief from the government. The government has pegged the country's total sugar production to decline by 18 per cent to 273 lakh tonne in the ongoing 2019-20 season (October-September) on fall in sugarcane output in key growing states. But sugar price may come under in next season as sugarcane acreage as on 7 August increased by 62000 hectare. About 51.95 lakh hectare area coverage under sugarcane as compared to 51.33 lakh hectare during the corresponding period of last year. Higher area is reported from the States of Maharashtra (1.47 lakh ha), Uttar Pradesh (0.18 lakh ha), Karnataka (0.09 lakh ha), Chhattisgarh (0.01 lakh ha) and Punjab (0.01 lakh ha).

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