The Centre has decided to expand the buffer stock of sugar and simultaneously stop the trend of raising the minimum support price for sugar cane to balance demand-supply imbalances, stabilise retail prices and reduce payment arrears from mills to farmers.
The two decisions taken by the Cabinet Committee on Economic Affairs on Wednesday, were welcomed by the sugar industry.
The country will produce 32.95 million tonnes of sugar in the current marketing year, as against the annual domestic demand of just 26 million tonnes.
At the same time, the Centre has been regularly increasing the Fair and Remunerative Price, the minimum price that mills must pay to sugar cane cultivators, an important vote bank, especially in Uttar Pradesh. As a result, payment arrears shot up to ₹25,000 crore earlier this year, and are still above the ₹15,000 crore mark.