Current Affairs

Cabinet Approves Rs 8,500 Crore Bailout Package for Sugar Industry

Union Cabinet chaired by has approved a Rs 8,500 crore bailout package for the sugar industry.

Cabinet Approves Rs 8,500 Crore Bailout Package for Sugar Industry
Out of the total amount Rs 4,500  crore soft loan will be used for building ethanol production capacity and creating a 3 million tonne stockpile to soak up excess supply.
The government has taken the decision to tackle the problem of liquidity of sugar mills stressed by the accumulation of huge cane price arrears of farmers.

PM has approved the following measures involving total amount of about Rs. 7000 crore:

  • Creation of buffer stock of 30 LMT of sugar for one year and to incur an estimated expenditure of Rs.1175 crore for this purpose. 
  • The reimbursement under the scheme would be made on a quarterly basis which would be directly credited into farmers’ account on behalf of mills against their cane price dues.
  • Fixation of the minimum selling price of white sugar would be based on Fair Remunerative Price (FRP) of cane and minimum conversion cost of white/refined sugar. The minimum selling price of white/refined sugar shall be initially fixed at Rs.29/kg which can be revised by DFPD subsequently based on the revision of FRP etc. 
  • To augment capacity through up-gradation of existing distilleries attached to sugar mills by installing incineration boilers and setting up new distilleries in sugar mills; government will bear interest subvention of maximum Rs.1332 crore over a period of five years including moratorium period of one year on estimated bank loan amounting to Rs.4440 crore to be sanctioned to the sugar mills by the banks over a period of three years for which DFPD would formulate a detailed scheme in this regard. This would help diversion of sugar during surplus phase to reduce excess inventories.

Important Steps Taken by GoI

In order to stabilize sugar production at a reasonable level with a view to improve the liquidity position of the mills thereby enabling them to clear the cane price arrears of farmers, Central Government has taken the following steps in past four months:

(i) The custom duty on import of sugar is increased from 50% to 100% to check any import to the country.
(ii) Stock holding limits on producers of sugar for the months of February and March, 2018 were imposed to stabilise the domestic sugar price.
(iii)  Custom duty on export of sugar has been withdrawn to encourage sugar industry to start exploring the possibility of export of sugar.
(iv)   Mill-wise Minimum Indicative Export Quotas (MIEQ) of 20 LMT of sugar was allocated for export during Sugar Season 2017-18.
(v)   Duty Free Import Authorization (DFIA) Scheme was reintroduced in respect of sugar to facilitate and incentivize export of surplus sugar by sugar mills.
(vi)  Financial assistance to sugar mills @ Rs.5.50/qtl of cane crushed was given during 2017-18 Sugar Season to offset the cost of cane.

Expected Questions

In order to stabilize sugar production at a reasonable level with a view to improve the liquidity position of the mills thereby enabling them to clear the cane price arrears of farmers, which of the following steps is incorrectly mentioned about the measures n taken by Central Government of India?
(i) The custom duty on import of sugar is increased from 50% to 80%
(ii) Custom duty on export of sugar has been withdrawn
(iii) Financial assistance to sugar mills @ Rs.6.50/qtl of cane crushed was given during 2017-18 Sugar Season.

a. Only (i)
b. Only (ii)
c. Only (iii)
d. (i) and (ii) both
e. (i) and (iii) both
Cabinet Approves Rs 8,500 Crore Bailout Package for Sugar Industry Cabinet Approves Rs 8,500 Crore Bailout Package for Sugar Industry Reviewed by insiya yadav on June 08, 2018 Rating: 5

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