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- 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
- 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.
