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Centre trying to resolve Uttar Pradesh sugar logjam: Food Minister

11 Sep 2014 Evaluate

With the new sugar crushing season just being around the corner, Food Minister Ram Vilas Paswan underscored the Centre was trying to resolve a stalemate between the Uttar Pradesh (UP) government and the state's sugar producers and that the government also ready to consider more steps, including extending the loan tenures of mills, if the sugar producers could give an assurance on paying arrears to cane farmers.

Paswan also highlighted that In June, after an inter-ministerial meeting, the Centre had decided to offer additional loans at a 12% interest subvention, if mills give an undertaking they would clear cane arrears at the earliest. Among other decisions taken in June, he said the government could raise the import duty on sugar to 40% from 15% then to curb cheaper inflows from overseas and would also renew commitment to make mandatory blending of ethanol with petrol at a 5:95 ratio with vigour, which in later dates would be raised to the 10:90 ratio in the long run, to fetch more buyers and ensure competitive prices for the cane by-product. However, since then the Centre has raised the import duty on sugar to 25%, instead of 40%, from 15% before, as it sought to balance the interest of producers with consumers.

At the event to mark the first 100 days of the new government, the Minister further unveiled that both the state government and sugar mill owners were made to sit and discuss the issue on August 14. While, the government exerted enough pressure on mills to clear the arrears, it felt, the state government on their part should take strict action to ensure farmers are paid off their dues.

On August 22, the UP government had announced a rebate of Rs 6 per quintal to millers provided they clear their entire arrears towards farmers by September 30, which was refused by Private mills, who cited this as insufficient enough to meet the aid conditions.

Sugar mills in the state, the country's second largest sugar producer, owe Rs 4,560 crore to farmers for purchasing cane in 2013-14. Mills blame high state fixed price of cane for their inability to pay, and have been asking the government to link cane and sugar prices, as is the case in top producer Maharashtra and Karnataka.

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