The Uttar Pradesh government plans to introduce a marginal cess on sugar to fund the ailing sector to handle distress. The proposal was mooted at the chief minister’s review meeting of the sugarcane and excise departments.

The proposal to introduce a UP sugar and sugarcane development fund aims at helping the ailing sector, especially sugarcane growers who have been battling delayed payments year over year.

Besides, the fund will also be used for the welfare of sugarcane farmers and building other facilities such as toilets, restrooms, drinking water for them. Cane commissioner Sanjay Bhoosreddy told FE that the proposal has got an in-principle approval in the meeting today and will be further sent for legal vetting before the modalities are finalised.

“We are trying to build a corpus in a few years that will be enough to handle the distress in whichever crisis that hits the sector, be it building sugarcane infrastructure or making on-time payments to farmers. The idea is to insulate the treasury from the sugar sector as the government cannot keep funding the sector every time a crisis hits it,” he said, adding that both the state and central governments have already pumped in approximately Rs 11,000 cr in funding the sugar sector through various schemes, both through grants and loans in the last two years.

“Every year, the treasury cannot be expected to pump in this much of money into the sector. We have to take measures so that we can raise approximately Rs 5,000 crore per year that can be pumped back into the sector,” he said.