Sweet nothing
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Sweet nothing

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  1. The Cabinet committee on Economic Affairs approved a Rs 7,000 package for the sugar sector recently.

Important Analysis

2.Sugar mills dues to farmers stand Rs 22,000 crore.

4.Steps taken by the government:

  • Recently, the centre proposed a special cess under the GST to help alleviate distress among sugarcane farmers.
  • Assured minimum pricing
  • Special incentives for increasing malassess and ethanol production.
  • Govt will procure sugar from mills at a fixed minimum price.
  • Financial assistance to farmers.

5.Benefits of bailout package:

  • Help famers to come out of debt.
  • Dissipate their immediate liquidity problems to an extent.
  • According to Rating agency Crisil, it will help mitigating about 40% of the outstanding areas to sugarcane farmers.
  • This could help to use excess sugar for the manufacturing of alcohol or ethanol.

6.Problems associated with the sector:

  • Structural problems.
  • Sticks to old-style pricing.
  • Stock holding intermediaries
  1. Solutions:
  • Ensure some linkage between the price paid for sugarcane and the end-product it is used for.
  • Encouraging the feedback from market prices to inform farmer’s future cropping decisions.

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