UP sugar crisis: No decision yet, will meet again next week

The informal meeting of key UPA ministers to discuss relief measures for sugar mills has ended without any decision. The finance minister says the Cabinet will take a decision next week on the sugar issue. However, agriculture minister says no decision yet, as government is not in the position to give any money, reports CNBC-TV18’s Shereen Bhan.

There was no expectation of a decision being taken by the meeting called by the finance minister, the agriculture minister and Ajit Singh. A decision, if any, will be taken at the level of the Cabinet which is exactly what the finance minister said.

Also Read: UP sugar crisis: Price over Rs 225/qnt unviable, says ISMA
In 2006-2007, when a similar crisis had engulfed Uttar Pradesh and the sugar mill business, the centre had intervened by way of incentivising exports. It is unlikely that the government will follow this route because the export incentives scheme is not WTO compliant.
The other measure that had been taken was that the centre had borne the carriage fee of the buffer stock.
Thirdly, by way of an interest free loan for four years, where the centre bore the interest of 12 percent for four years, the amount worked out to about Rs 3,500 crore. This is the most likely option that the centre may consider.
However, the agriculture minister Sharad Pawar said that we don’t really have the money, so, we will have to take a call on what can we do to intervene.
The mill owners are willing to pay Rs 225 for a quintal of sugar. The state government has advised a price of Rs 280, difference of Rs 55, the sugar business feels can be met either by way of a direct subsidy by the UP government or through several other options.
Allowing sugar mills to sell molasses to liquor industry at market prices, allowing co-generation prices of the sugar industry to be hiked, are things that the UP government will have to mull carefully.
There is also a talk about the capital intensive scheme or capital subsidy scheme of 2004 being revived but that would mean a cost of about Rs 4,000-5,000 crore as far as the UP exchequer is concerned. According to sources, it is unlikely that the government will go down that route.
At this point in time, no decision has been taken at the meeting today. There has been no response from the UP government. Infact the UP government now suo- moto taking action, coercing sugar mills to pickup sugarcane from farmers and also telling them and giving them commencement operation dates.
Next week some decision will be taken by the centre and as the crushing season proceeds, with political situation building up, the future of 35 lakh farmers is at stake.