The position of cane price payment and arrears for sugar season 2016-17, as on 31.07.2017, is as under:
| Title |
(In Crores) |
| Cane Price Payable |
56761.49 |
| Cane Price Paid |
52453.29 |
| Cane Price Arrears |
4308.20 |
| Percentage of Cane Price Arrears on Cane Price Payable |
7.59 |
DE-REGULATION OF SUGAR SECTOR ON THE RECOMMEN DATIONSOF DR. C. RANGARAJAN COMMITTEE REPORT :
The year 2013-14 was a water-shed for the sugar industry. The Central Government considered the recommendations of the committee headed by Dr. C. Rangarajan on de-regulation of sugar sector and decided to discontinue the
system of levy obligations on mills for sugar produced after September, 2012 and abolished the regulated release mechanism on open market sale of sugar. The de-regulation of the sugar sector was undertaken to improve the financial health of sugar mills, enhance
cash flows, reduce inventory costs and also result in timely payments of cane price to sugarcane farmers. The recommendations of the Committee relating to Cane Area Reservation, Minimum Distance Criteria and adoption of the Cane Price Formula have been left
to State Governments for adoption and implementation, as considered appropriate by them. The gist of recommendations of the Committee and action taken by the Government thereon is at Annexure-I.
Annexure-I
Implementation of Recommendations of Dr. Rangarajan Committee
| Issues |
Gist of Recommendations |
Status |
| Cane Area Reservation: |
Over a period of time, states should encourage development of such market-based long-term contractual arrangements, and phase out cane reservation area and bonding. In the interim, the current system may continue. |
States have been requested to consider the recommendations for implementation as deemed fit. So far, none of the States have taken action, current system continues. |
| Minimum Distance Criteria: |
It is not in the interest of development of sugarcane farmers or the sugar sector, and may be dispensed with as and when a state does away with cane reservation area and bonding. |
States have been requested to consider the recommendations for implementation as deemed fit. There is no reservation of area in Maharashtra. Rest of the States have not made any changes in the current arrangement. |
| Sugarcane Price : Revenue Sharing |
Based on an analysis of the data available for the by-products (molasses and bagasse / cogeneration), the revenue-sharing ratio has been estimated to amount to roughly 75 per cent of the ex-mill sugar price alone. |
States have been requested to consider the recommendations for implementation as deemed fit. So far only Karnataka & Maharashtra have passed state acts to implement this recommendation. |
| Levy Sugar |
Levy sugar may be dispensed with. The states which want to provide sugar under PDS may henceforth procure it from the market directly according to their requirement and may also fix the issue price. However, since currently
there is an implicit cross-subsidy on account of the levy, some level of Central support to help states meet the cost to be incurred on this account may be provided for a transitory period. |
Central Government has abolished levy on sugar produce after 1st October, 2012. Procurement for PDS operation is being made from the open market by the states/UTs and Government is providing a fixed subsidy @ Rs. 18.50
per kg for restricted coverage to AAY families only who will be provided 1 kg of sugar per family per month. |
| Regulated Release Mechanism |
This mechanism is not serving any useful purpose, and may be dispensed with. |
Release mechanism has been dispensed with. |
| Trade Policy |
As per the committee, trade policies on sugar should be stable. Appropriate tariff instruments like a moderate export duty not exceeding 5 per cent ordinarily, as opposed to quantitative restrictions, should be used to
meet domestic requirements of sugar in an economically efficient manner. |
Import duty has been enhanced from 25% to 40% w.e.f. 29.4.2015; which has now been enhanced to 50% w.e.f. 10.07.2017. Custom duty @ 20% has been imposed on export of sugar vide Department of Revenue’s notification no. 37/2016
dated 16.06.2016. |
| By-products |
There should be no quantitative or movement restrictions on by products like molasses and ethanol. The prices of the by-products should be market-determined with no earmarked end-use allocations. There should be no regulatory
hurdles preventing sugar mills from selling their surplus power to any consumer. |
Excise duty on potable alcohol/ liquor is a major source of revenue for the State Govts. Restriction on movement of ethanol and levying of taxes and duties on it by State Governments continue to be an impediment in successful
implementation of EBP. The Department of Industrial Policy and promotion has now amended the I (D&R) Act, 1951 vide notification No. 27 of 2016 dated 14.5.2016. With this amendment, the States can legislate, control and/or levy taxes and duties on liquor meant
for human consumption only. Other than that i.e. de-natured ethanol, which is not meant for human consumption, will be controlled by the Central Government only. With the amendment of I(D&R) Act, 1951 not only the movement of fuel grade ethanol will become
smoother but the industry will be encouraged to produce more ethanol thereby increasing the blending percentage with petrol further. |
| Compulsory Jute Packing: |
May be dispensed with. |
The compulsory packaging of sugar in jute bags has been relaxed further. And only 20% of the production is to be mandatorily packed in jute bags. |
Sugar Subsidy
Central Government was reimbursing @ 18.50 per kg of sugar distributed by the participating State Governments /UT Administrations. The scheme was covering all BPL population of the country as per 2001 census and all the
population of the North Eastern States / special category/ hilly states and Island territories. The National Food Security Act, 2013 (NFSA) is now being universally implemented by all 36 States/UTs. Under the NFSA, there is no identified category of BPL; however,
the Antyodaya Anna Yojana (AAY) beneficiaries are clearly identified. The Government of India has reviewed the Sugar Subsidy Scheme and has decided that it is imperative to give access to consumption of sugar as a source of energy in diet, for the poorest
of the poor section of the society i.e. AAY families. Accordingly, Central Government decided in May, 2017 that the existing system of sugar distribution through PDS may be continued as per the following:-
(i) The existing scheme of supply of subsidized sugar through PDS may be continued for restricted coverage of AAY families only. They will be provided 1 kg of sugar per family per month.
(ii) The current level of subsidy at Rs. 18.50 per kg provided by the Central Government to States/UTs for distribution of sugar through PDS may be continued for the AAY population. The States/UTs may continue to pass on
any additional expenditure on account of transportation, handling and dealers’ commission etc. over and above the retail issue price of Rs. 13.50 per kg to the beneficiary or bear it themselves.
Pursuant to the above decision, revised guidelines for reimbursement of sugar subsidy to States/UTs for distribution of sugar under PDS for AAY families have also been issued.
Ethanol Blended Petrol Programme (EBP Programme)
Ethanol is an agro-based product, mainly produced from a by-product of the sugar industry, namely molasses. In years of surplus production of sugarcane, when prices are depressed, the sugar industry is unable to make timely
payment of cane price to farmers. The Ethanol Blended Petrol Programme (EBP) seeks to achieve blending of Ethanol with motor sprit with a view to reducing pollution, conserve foreign exchange and increase value addition in the sugar industry enabling them
to clear cane price arrears of farmers.
Ethanol Blended Petrol (EBP) Programme has been taken up since the year 2007 The Cabinet Committee on Economic Affairs at its meeting held on 22/11/2012, considered the recommendations of the Group of Ministers on the reports of the Expert Committee on Pricing
of Ethanol and the Economic Advisory Council to the Prime Minister, and approved that the procurement price of ethanol will not be fixed by the Government and will be decided henceforth between the oil marketing companies and the suppliers of ethanol. Pursuant
to the above Cabinet decision. Ministry of Petroleum & Natural Gas have issued a Gazette Notification dated 02/01/2013 for implementation of 5% mandatory ethanol blending with petrol across the Country. The Central Government has scaled up blending targets
from 5% to 10% under the EBP. The procedure of procurement of ethanol under the EBP has been simplified to streamline the entire ethanol supply chain and remunerative ex-depot price of ethanol has been fixed. To facilitate achieving of new blending targets,
a "grid” which networks distilleries to OMC depots and details quantities to be supplied has been worked out. State-wise demand profile has also been projected, keeping in view distances, capacities and other sectoral demands. Excise duty has also been waived
on ethanol supplies to OMCs for EBP by sugar mills during 2015-16 (up to 10 August, 2016). The results have been quite encouraging, with supplies doubling every year. In the year 2013-14, ethanol supplied for blending was only 38 crore litres, whereas in 2014-15,
under the modified EBP supplies increased to 67 crore litres. In the ethanol season 2015-16, the ethanol supply has been historically high and has reached 111 crore litres achieving 4.2% of blending.