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    Food ministry seeks Rs 5,600 crore to pay export subsidy dues of sugar mills

    Synopsis

    “So far subsidy of only Rs 600 crore has been disbursed. We need Rs 5,600 crore more to clear dues. The money will help millers clear can arrears to farmers which have been mounted to around Rs 16,000 crore,” said a senior food ministry official.

    Government expects the production of sugar to be around 32.5 million tonnes in the next season (October 2020-September 2021) as against the annual domestic demand of 26 million tonnes.
    New Delhi: The food ministry has sought Rs 5,600 crore to clear export subsidy dues of sugar mills. The government gives a subsidy of Rs 10,448 for the export of every tonne of sugar.

    Exports in the current season are estimated to be 5.7 million tonnes, but officials said very little subsidy has been paid out so far.

    “So far subsidy of only Rs 600 crore has been disbursed. We need Rs 5,600 crore more to clear dues. The money will help millers clear can arrears to farmers which have been mounted to around Rs 16,000 crore,” said a senior food ministry official.

    He said that the ministry would need additional Rs 2,500 crore to settle buffer stock subsidy and interest subvention on soft loans given to millers.

    “The government reimburses sugar mills Rs 1,674 crore for carrying buffer stock of 4 million tonnes. The government also provides soft loans to the extent of Rs. 7,900-10,540 crore to the sugar industry where in it (government) bears the interest subvention cost at 7-10% to the extent of Rs. 553 crore to Rs 1,054 crore for one year,” the official said.

    He said that the ministry is likely to propose for providing the export subsidy to millers in the next season also as the export has risen by over 50% from last year due to this financial support.

    “It is still under deliberation. The policy and subsidy amount is yet to be finalised,” the official said.

    The government expects the production of sugar to be around 32.5 million tonnes in the next season (October 2020-September 2021) as against the annual domestic demand of 26 million tonnes.

    There will be surplus of 6-6.5 million tonnes and we expect a carryover stock of another 1 million tonnes. Even if we divert 2 million tonnes to ethanol production, there will be need for exports aggressively,” he said.
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