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Oct 04, 2013, 02.07 PM IST | Source: CNBC-TV18

UP sugar crisis: Govt mulls linking cane with sugar prices

The Uttar Pradesh government is thinking to link cane prices to sugar prices, but the sugar industry maintains its stance that crushing will not be possible until the government adopts the Rangarajan Committee's recommendations.

Shereen Bhan

Managing Editor, CNBC-TV18

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The crisis surrounding the Uttar Pradesh sugar mills continues with a glimmer of hope as the state government is considering linking cane prices to sugar prices. The sugar industry, meanwhile, maintains its stance that it is impossible to start crushing till the government adopts the recommendations of the Rangarajan Committee, reports CNBC-TV18’s Shereen Bhan, quoting sources.

Also read: On verge of extinction, UP sugar mills send 'SoS' to govt

A series of meetings between the state government and the sugar industry have taken place. An all-party meet was also called by the Prime Minister Manmohan Singh. There could be a formal intervention by the government by the end of October or the beginning of November, sources say. However, whether that will be either by direct subsidy or by adopting the recommendations of the Rangarajan Committee is unknown.

It is estimated that the subsidy cost for the government will work out to about Rs 4,000-4.500 crore. In western UP, mills start to function around November 10 followed by other parts in a couple of days. The government is hoping that because of pressure from the farming community the decision to actually link the cane prices to sugar prices will be possible on ground.

Last week, the biggest players in the sugar industry had stated that it was unviable for them to start the crushing season as the government had not adopted the recommendations of the Rangarajan Committee. Meanwhile, banks have denied renewing the limits on the sugar industry.

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