A sugar cess, a production subsidy for cane farmers and a reduction of the Goods and Services Tax on ethanol are three suggestions that a Group of Ministers will present to the Union Cabinet in an effort to resolve the crisis arising from sugar mills defaulting on payments to farmers, with dues now likely to have crossed ₹20,000 crore.
“We are looking for proposals that will help both the sugarcane farmers and the sugar mills,” Minister for Consumer Affairs, Food and Public Distribution Ram Vilas Paswan told The Hindu after the meeting on Monday evening.
In a statement, Mr. Paswan said that the GoM discussed the three formulas for paying sugarcane farmers. A note presenting all the proposals will soon be prepared to present to the Cabinet, said the statement.
The proposal is to reduce the GST from 18% to 5%, Mr. Paswan told The Hindu , adding that the GoM would hold another meeting to finalise the details of the proposals. He said the government was looking for ways to incentivise value-added products, including molasses and ethanol, which could utilise the surplus harvest of sugarcane, and which would reduce the burden on the mills.
The GoM is headed by Transport Minister Nitin Gadkari, and includes Agriculture Minister Radha Mohan Singh, Petroleum and Natural Gas Minister Dharmendra Pradhan, as well as Mr. Paswan.
Last month, the Food Ministry told Parliament that sugar mills had pending dues worth ₹13, 899 crore as on March 21. Industry lobbyist Indian Sugar Mills Association estimates that figure has now crossed ₹20,000 crore.
Record high
Sugar production has hit record highs this year, crossing domestic consumption estimates and resulting in a crash in prices. According to ISMA data, sugar production up to April 15 stood at 299.8 lakh tonnes. That’s already 50 lakh tonnes more than the government’s estimated sugar consumption for the whole season, and 227 mills are still crushing cane. Uttar Pradesh and Maharashtra had each produced almost 105 lakh tonnes by April 15.
