Cabinet Committee on Economic Affairs has decided to pay a production-linked subsidy of Rs 4.50 per quintal directly to cane farmers in the 2015-16 season to help cash-starved sugar mills clear arrears. It would cost the exchequer about Rs 1,147 crore.
- Sugar mills are facing a liquidity crunch due to low prices of the sweetener in retail markets. The millers owe about Rs 6,500 crore to cane farmers.
The Food Ministry had proposed a production subsidy of Rs 4.75 per quintal out of the cane FRP (fair and remunerative price) of Rs 230 per quintal for the 2015-16 season (October-September).
- At present, sugar mills have to pay the entire cane price called FRP, fixed by the Centre. FRP is the minimum price that sugar mills have to pay to cane farmers.
- To liquidate surplus sugar, the government has made it mandatory to millers toexport 4 million tonnes in the 2015-16 season.
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