Govt incentives throughout sectors however bitter actuality verify for sugar

Written by Harish Damodaran
| New Delhi |

November 17, 2020 4:58:17 am

In Uttar Pradesh, the place crushing operations for 2020-21 have already commenced, mills are but to pay farmers Rs 5,800 crore-plus out of the whole Rs 35,898.15 crore worth of cane that they purchased within the earlier season.

Even because the Centre has introduced production-linked incentives price some Rs 2 lakh crore for a bunch of sectors to spice up manufacturing investments, the sugar business is complaining of big non-payments towards schemes notified greater than a 12 months in the past.

The Narendra Modi authorities had, final 12 months, offered an incentive of Rs 10,448 per tonne for mills to export sugar throughout the 2019-20 season (October-September). That “lump sum help” — in direction of bills on advertising and marketing, inner transport, port dealing with and ocean freight — was notified by the Division of Meals and Public Distribution on September 12, 2019.

The scheme, restricted to a most admissible export amount of 60 lakh tonnes (lt) for all mills, would have entailed a fiscal outgo of Rs 6,269 crore. The business virtually met the goal, with about 56.5 lt of sugar getting shipped out in 2019-20, surpassing the earlier file of 49.57 lt achieved within the 2007-08 season (see desk).

The 56.5 lt exports ought to have entitled mills to complete funds of over Rs 5,900 crore. However precise disbursements, in line with an business official, have been hardly Rs 600 crore to this point. The 2020-21 Union Budget made no provision in direction of sugar export help for the final season. Nor was any quantity allotted below the supplementary demand for grants tabled within the current monsoon session of Parliament.

“Mills responded positively to the scheme. Exports had been made at paper-thin margins, even after factoring within the incentive (of Rs 10,448 per tonne). Not receiving respectable dues for shipments undertaken many months again, regardless of submitting all of the required paperwork in time, might be very irritating. In lots of circumstances, the curiosity on financial institution loans as a result of non-receipt of incentive cost has worn out even the meager margins from exports,” mentioned Prakash Naiknavare, managing director, Nationwide Federation of Cooperative Sugar Factories Ltd.

The export incentive scheme was designed preserving in view the all-time-high sugar shares of 143.33 lt with mills at first of the 2019-20 season, equal to over 6.5 months of home consumption. Exporting part of the excess was anticipated to enhance the liquidity place of mills, enabling them to clear the cane dues of farmers. Exports did occur; opening shares for the present season from October, too, fell to round 110.5 lt.

“We may obtain the highest-ever exports in any 12 months, however the Covid-19-induced lockdown. Authorities departments, particularly meals, transport and residential affairs, had been most useful. They ensured that the vans containing sugar from the mills moved with none roadblocks and had been additional shipped out from the ports,” acknowledged Naiknavare.

However the non-payment of incentive hasn’t helped in any respect. Mills right now are confronted with a critical disaster of liquidity, whilst most of them get able to crush cane for the brand new season publish Diwali.

But it surely isn’t export incentive alone.

The Modi authorities had even earlier – on July 31 final 12 months – notified a scheme for the creation of a 40-lt buffer inventory of sugar. This inventory was to be stored in mill premises, with the Centre bearing its carrying value (by way of curiosity, insurance coverage and storage fees) for a full 12 months from August 1, 2019. Whereas the scheme’s estimated fiscal outgo was Rs 1,674 crore, precise funds right here even have been within the area of Rs 300 crore.

In Uttar Pradesh, the place crushing operations for 2020-21 have already commenced, mills are but to pay farmers Rs 5,800 crore-plus out of the whole Rs 35,898.15 crore worth of cane that they purchased within the earlier season.

“From the place can we pay? The Centre owes us roughly Rs 2,400 crore of export incentive and one other Rs 280 crore as buffer inventory subsidy. As well as, there are excellent funds of Rs 900 crore from the UP Energy Company towards provide of co-generation electrical energy,” claimed a Lucknow-based business spokesperson.

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