The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, on Wednesday approved subsidy of Rs 5.5 per quintal of cane crushed to farmers, so millers can clear arrears that have reached Rs 19,000 crore.
"There is a bumper production of sugarcane this year. In order to offset the cost of cane, the government has decided to give Rs 5.5 per quintal of cane crushed. The assistance will be paid directly to the farmers," Union Minister Ravi Shankar Prasad said while briefing the media about the Cabinet decisions.
Sugar mills said that they were unable to pay farmers due to a slump in sugar prices in the domestic market.
Prasad said the government has already raised import duty on sugar from 50 per cent to 100 per cent to protect domestic industry besides making export duty zero.
Last week, a Group of Ministers including Food Minister Ram Vilas Paswan, Transport Minister Nitin Gadkari, and Petroleum Minister Dharmendra Pradhan held a meeting to find ways to help sugar mills in clearing the pending dues to farmers.
Industry body Indian Sugar Mills Association (ISMA) called the Cabinet decision a "positive move" and said the subsidy will reduce a small part of the losses that the sugar mills are incurring due to a massive fall in the ex-mill sugar price.
In a statement, ISMA Director General Abinash Verma said: "It is important to note that the government has not only accepted that the sugar industry and the farmers are in a problem, but this can be taken as a first step towards various other initiatives and financial assistance that the government has to take very soon to further help the industry and the sugarcane farmers come out of the current crisis."
Last week, sugar production in the countryr had reached 29 million tonnese and it is likely to cross 30 million mark this season.
--IANS
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