The Cabinet Wednesday approved a decision to pay sugarcane farmers a subsidy of Rs 55 a tonne for their produce to help millers clear about Rs 19,000 crore arrears they owe to farmers, amid a bumper harvest and a sharp plunge in sugar prices. It also gave its approval to promulgate an ordinance to amend a law for faster disposal of commercial disputes, Union law minister Ravi Shankar Prasad said.
The government’s intervention in the sector is aimed at thwarting protests by cane farmers who haven’t been paid for produce supplied to mills in three key producer states: UP, Maharashtra, and poll-bound Karnataka. The ordinance for prompt settlement of commercial disputes is likely to help improve India’s ranking in the ‘Ease of Doing Business’.
The subsidy for cane growers comes in view of mills coping with negative margins — their cost of production has exceeded prices — due to a domestic glut and a slump in international sugar prices. Domestic prices are currently at a 29-month low. This has hurt mills’ ability to pay farmers. Millers are required to pay farmers within 14 days of acquiring their cane, failing which the payment gets categorised as “arrears”, which currently stand at Rs 19,000 crore.
Sugar production in the 2017-18 season is estimated to be over 30 million tonnes, nearly 10 million tonnes more than the previous season. India’s domestic consumption is estimated to be 24-25 million tonnes.
“Due to depressed market sentiments and crash in sugar prices, the liquidity position of sugar mills has been adversely affected, leading to accumulation of cane price dues of farmers which have reached to more than Rs 19,000 crore,” a government statement said.
To help stabilise prices, the government had earlier increased customs duty on import of sugar from 50% to 100%. It has also fully withdrawn the customs duty on export of sugar to encourage sugar industry to start exploring possibility of export of sugar.
The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts bill is pending in Parliament. The proposed ordinance will replace the bill, which will allow commercial courts to decide disputes of a reasonable value expeditiously. Currently, it takes 1,445 days to resolve commercial disputes of lesser value.The commercial disputes law will help bring down the specified value of a commercial dispute to Rs 3 lakh from the Rs 1 crore.
With a view to address the issue of faster resolution of matters relating to commercial disputes and to create a positive image particularly among the foreign investors, the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015, was enacted and commercial courts were established at district levels in all jurisdictions, except in the territories over which the high courts have original ordinary civil jurisdiction.
The Cabinet also approved the continuation of the Krishonnati Yojana in agriculture for a period of 2017-18 to 2019-20 with a central share of Rs 33,269.976 crore. The Cabinet also approved the restructuring of multi-sectoral development scheme for minorities, which will be called Pradhan Mantri Jan Vikas Karyakram.