New Delhi: The Union cabinet on Wednesday announced an export subsidy of over Rs 10,000 per metric tonne to sugar mills to help clear the pending dues of sugarcane farmers for the 2019-20 season. The amount will be credited directly into the accounts of farmers on behalf of mills against the dues owed to farmers, the government said. The government projects that the initiative could cost Rs 6,268 crore.
“We have taken an important decision in the interest of sugarcane farmers. The cabinet has approved export subsidy for 6 million tonnes for 2019-20,” minister for information and broadcasting Prakash Javadekar said.
Sugarcane dues across the country continue to be almost Rs 10,000 crore even after a couple of months have passed since the season ended and sugar mills stopped crushing sugarcane. In Uttar Pradesh, the biggest producer of sugarcane in the country, unpaid dues for the 2018-19 season stood at Rs 7,506 crore on August 20 as 23% of the dues remained unpaid.
The decision, could irk the WTO which has already received complaints from sugar producing countries such as Australia, Brazil and Guatemala who have termed India’s export subsidies for sugar as illegal.
Railways and commerce minister Piyush Goyal said that the decision is ‘WTO compliant’ as it allows for certain subsides for agricultural practices till 2023.
Delayed payments to sugarcane farmers have proven to be the Achilles heel of the Narendra Modi government which has failed to ensure that timely payment is made. It had raised expectation prior to the Uttar Pradesh assembly elections in 2017 when it promised that if it is voted to power in the state, it would ensure that payment is made within 14 days of sale. After being voted to power, however, the BJP government in the state has failed to deliver on the promise.
The Indian Sugar Mills Association estimates that for the 2019-20 season India will produce 28.2 million tonnes of sugarcane, which is lower than last year’s production which stood at 32.9 million tonnes. The decline is largely accounted for by lower area under sugarcane in Karnataka and Maharasthra due to poor rainfall.