The Cabinet, on Wednesday, approved a Rs 8,500 crore bailout package for the sugar industry which includes Rs 4,500 crore soft loan for building ethanol production capacity and creating a 3 million tonne stockpile to soak up excess supply.
The Cabinet, headed by Prime Minister Narendra Modi, also approved a Rs 1,300 crore interest subversion on the loan to be provided for creating new ethanol production capacity as also expanding the existing one, sources said.
Ethanol extracted from sugarcane will be used for blending in petrol and will provide cane farmers remunerative price for their crop. Ethanol doping in petrol will also help the country cut its oil imports. Sources said Rs 1,200 crore would be the carrying cost for building of the buffer stock.
Also included in the package is Rs 1,540 crore previously announced production-linked direct payment to help clear dues which sugar mills owe to cane farmers. The Centre has already doubled sugar import duty to 100 per cent and scrapped export duty to check sliding domestic prices.
It has also asked mills to export 2 million tonnes of sugar.The Centre, on Wednesday, has approved a bailout package of over Rs 8,500 crore to ensure cash-starved mills clear dues to farmers at the earliest. The decision has taken place in the meeting of the Cabinet Committee on Economic Affairs (CCEA) to be held on Wednesday.
In order to address the concerns over mounting cane arrears of more than Rs 22,000 crore, the government announced a bailout package of Rs 8,500. The government came up with this comprehensive plan in order to improve liquidity in the sugar industry and support cane farmers.
Last month, the government had announced a Rs 1,500 crore production-linked subsidy for sugarcane farmers to help millers pay cane payments.
Sugar mills are unable to make payments to cane growers as their financial health has worsened due to a sharp fall in sugar prices after a record production of 31.6 million tonne (MT) so far in the 2017-18 season (October-September).
Maximum cane dues of more than Rs 12,000 crore are in Uttar Pradesh alone, the country’s biggest sugarcane producing state.
(With agency inputs)