Subsidy will be based on actual sugar exports now

NEW DELHI: The Cabinet has approved provision of subsidy to sugar mills on the basis of actual exports and supply of ethanol, a move that the government says will help mills make timely payments to farmers.

It has also simplified procedure for procuring jute bags for foodgrain and authorised the Jute Commissioner for the task instead of multiple ministries and bodies including the directorate general of supplies and disposals.

The sugar subsidy was earlier meant to be disbursed on the basis of estimated exports and ethanol output. However, the actual production turned out to be lower due to drought-like conditions in the past. This had prompted states to demand lower targets for exports and ethanol supply, the government said in a statement.

The ethanol supply target will be revised to the actual quantity contracted to oil marketing companies that blend it with petrol.

Sugar output has exceeded demand in recent year, leading to low prices and weak finances of mills. This has led to the accumulation of huge cane arrears and prompted the government to take remedial action including incentive on raw sugar export, financial assistance to mills through soft loan scheme, facilitating sugar mills for supply of ethanol under Ethanol Blending Programme (EBP), to improve the liquidity position of sugar mills enabling them to clear cane price arrears of farmers.