The policy for the 2019-20 sugar season involves an export subsidy of ₹10,448 per metric tonne (mt) to sugar mills. Around ₹6,268 crore will be transferred directly to the farmers.
The move is aimed at countering the surplus sugar stock’s impact on prices. Lower sugar prices would make it difficult for mills to pay farmers’ dues. The direct transfer will also potentially curb pilferage and directly reach the farmers, a politically sensitive constituent that the National Democratic Alliance government is seeking to connect through various policy interventions.
“The subsidy would be directly credited into farmers’ account on behalf of mills against cane price dues and subsequent balance, if any, would be credited to mills’ accounts," the government said in a statement.
The sugar season 2019-20 is expected to have an opening and closing stock of 142mt and 162mt, respectively.
“The lump sum export subsidy will be provided for expenses on marketing costs, including handling, upgrading and other processing, costs of international and internal transport and freight charges on export of up to 60 lakh metric tonnes (LMT) of sugar limited to maximum admissible export quantity (MAEQ) allocated to sugar mills for sugar season 2019-20," it added.
Rural distress was a key issue in the run-up to the Lok Sabha polls, and the Bharatiya Janata Party (BJP) government is not taking any chances. Rural woes, particularly in Maharashtra, are acute with floods in the western part of the state, and the drought-like situation in the eastern part.
Last December, rural distress had cost the BJP two assembly elections in Madhya Pradesh and Chhattisgarh, and the party is not willing to take any chances this time around. In fact, the announcement is expected to further cement BJP’s support base among farmers before the state assembly elections.
The decision will also benefit sugar mill owners and would send a clear message that the BJP-led NDA government at the Centre was working for the benefit of farmers. This would also ensure that the BJP returns to power in both Maharashtra and Haryana.
In July, the Union cabinet had approved the creation of a buffer stock of 4mt sugar at an estimated cost of ₹1,674 crore. The step was aimed at increasing wholesale prices of sugar and improving cash flow to sugar mills, which in turn would help mill owners to clear farmers’ dues.
“The subsidy shall be in conformity with the provisions of Article 9.1 (d) and (e) of Agreement on Agriculture (AoA) and thus WTO-compatible," the statement said.
In a major outreach initiative to address the concerns of the farming community, which cost the Bharatiya Janata Party (BJP) three state elections last December, the NDA government extended the scope of the Pradhan Mantri Kisan Samman Nidhi, or PM-Kisan scheme, to include all the 145 million farmers across the country, besides announcing a ₹3,000 monthly pension scheme for 125 million small and marginal farmers. The previous NDA government, in its interim budget, had announced the income support scheme for small and marginal farmers who own less than five acres (two hectares) of land.
The government also recently approved a ₹13,343-crore centrally-sponsored vaccination scheme for livestock, including cows, bulls, buffaloes, sheep, goats and pigs, to eradicate diseases such as foot-and-mouth and Brucellosis to support livestock-rearing farmers.
Gyan Varma contributed to this story.