A group of ministers (GoM), headed by Home Minister Amit Shah, has recommended increasing the minimum selling price (MSP) of sugar by Rs 2 to 33 per kg to ensure mills clear the pending cane arrears of around Rs 20,000 crore at the earliest. The GoM took stock of the pending sugarcane dues to be paid by sugar mills which stand at around Rs 20,000 crore so far in the current 2019-20 season (October-September) and ways to ensure mills clear this at the earliest.
The GoM directed the Food Ministry to move a Cabinet note with a proposal to hike the MSP of sugar as recommended by the Niti Aayog. The government will consider other options if an increase in MSP of sugar does not help in reducing substantial cane arrears to farmers. A task force constituted by Niti Aayog on sugarcane and sugar industry had also recommended a one-time increase of Rs 2 per kg in MSP of sugar.
Last year, the government had increased the price at which mills sell sugar to bulk buyers by Rs 2/kg to Rs 31/kg. The minimum selling price of sugar is fixed taking into account the components of FRP and minimum conversion cost of the most efficient mills.
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