Falling short

Context: New proposals by NITI Aayog’s task force on sugar and sugarcane does not address the sectors survival without fiscal support.

Recommendations by Ramesh Chand panel

• Increasing MSP and Cess: Temporary increase of Rs 2 per kg in MSP (from Rs 31 to Rs 33)
• levying a cess: A cess of Rs 50/quintal to be levied for 3 years to “bridge funding” during exigencies.
• Tweaked revenue sharing mechanism: Increase of 5% in the share of cane growers as suggested by C Rangarajan Committee in 2012
• Environmental concerns: Capping cane cultivation to 85% of landholding and payment of Rs 6000 / hectare to shift to less water intensive crops.

Challenges that remain

• Low effect of price rise: Still after increment of MSP, the price is too meagre as compared to actual production cost.

• Hard to enforce: Due to oversupply and lockdown driven demand collapse for instance in manufacture of beverages etc which contribute 70% of sugar consumption.

• Cane price arrears payable to farmers: Have again started to mount (Uttar Pradesh alone over Rs 14,300 crore)

• Price equilibrium not maintained: Revenue sharing mechanism as proposed in the report might cause sugar mills to worry.

Way forward

• There is a need to look beyond to find effective short- and long-term solutions for releasing woes of sugar sector.