Sugar Current Affairs - 2019
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The Central government has increased the minimum selling price (MSP) of sugar by Rs. 2 per kg to Rs. 31.
Minimum Selling Price
Minimum Selling Price is the rate below which the mills cannot sell sugar in the open market to wholesalers and bulk consumers like beverage and biscuit makers.
Rationale behind the Increase
The decision to increase the minimum selling price has been taken keeping in mind the debt burden of the industry. As per the data provided by the Indian Sugar Mills Association, arrears of sugarcane farmers stood at around Rs. 20,000 crore as of January-end.
The increase in the Minimum Selling Price is expected to help millers to make the payment to sugarcane farmers. The government is also putting in place a mechanism to ensure the benefit due to the increase in the minimum selling price is passed on to the sugarcane farmers.
Other Steps taken to aid the ailing Sugar Mills
The government has taken several other steps like the increase in import duty on sugar to 100 per cent, scrapping of export duty, the creation of buffer stock, and subsidy for mandatory export of 5 million tonnes in the 2018-19 marketing year to help cash-starved mills clear cane dues.
The Central Board of Excise and Customs (CBEC) under Ministry of Finance has scrapped export duty of 20% on raw and refined sugar to boost shipments. The removal of export duty will help to export excess sugar output in India for sugar season 2017-18. This will also prevent further price erosion of the domestic sugar prices.
Sugar output is estimated to rise sharply to 29.5 million tonnes (MT) in 2017-18 marketing year (October-September) from 20.3 MT in the previous year. The domestic demand is 24-25 million tonnes annually. With domestic prices falling below cost of production, there was demand scrapping of export duty to liquidate surplus domestic stock. In February 2018, Government had doubled import duty on sugar to 100% and restricted sale by mills to keep a checking on falling prices.