The Akhilesh Yadav government in Uttar Pradesh has kept the state advised price (SAP) for sugarcane unchanged for the fourth consecutive year, giving much-needed respite to the struggling sugar industry.

The state cabinet, which gave its approval to the SAP on Monday, decided to leave the sugarcane price untouched at Rs 280 per quintal for the general variety, Rs 290 for the early variety and Rs 275 for the rejected variety. The last time the prices were raised was in 2012, the year when the Akhilesh Yadav government came to power.

Speaking to FE, principal secretary (sugarcane) Rahul Bhatnagar said the industry would pay the farmers the first tranche of the SAP at the rate of Rs 230 per quintal for the cane purchased within the first 14 days, which is at par with the FRP declared by the Centre, while the remaining amount would be paid by the industry within three months of the closing the mills.

“Since the industry is going through one of its toughest crisis, the state government has decided to help the mills by exempting from paying Rs 11.70 per quintal as Society Commission, Entry Tax on sugar and Purchase Tax on cane. Instead, the state government will pay the society commission at the rate of Rs 3 per quintal,” Bhatnagar said, adding that last year, the state government had paid society commission at the rate of Rs 2 per quintal on behalf of the industry.

In addition to this, the government has decided to set a limit of doling out cash subsidy to the industry at Rs 23.30 per quintal and link it to market forces.

“If the price of sugar goes below or above the benchmark price set by the government, it would either reduce the support or increase it in proportion. A committee headed by the chief secretary will study the average trend of the four commodities from October 1 2015 to May 31, 2016, and keep an eye whether the prices of the above factors are increasing or decreasing. In case the price of these factors shoot up, the government would reduce the additional support of R23.30/quintal and would increase it if the mills make a loss,” he said.

It may be mentioned that the government had delayed announcing the SAP for sugarcane this year, as it was strongly divided between demands from industry and farmers’ representatives as both wanted different pricing levels. The situation was all the more precarious as the state would be going for Assembly elections next year.

Reacting to the government’s move, UP Sugar Millers Association secretary Deepak Guptara said that the industry welcomed the appreciation of the problems by the state government.

“By refusing to buckle under the pressure of the farmers, the government has not only shown rare strength but also foresight as that is the only way to save the loss-ridden sugar industry from disaster. The government’s thinking is on the right line. It has finally understood the importance of the basic idea of price linkage,” said an industrialist on condition of anonymity.

However, VM Singh, convenor of Rashtriya Kisan Mazdoor Sangathan, termed the government’s decision as a “sell-out to sugar millers”. “The state government is trying to cover up its incompetence by giving in to the unjust demands of the sugar industry. It is in fact, hand-in-glove with the industry and has stabbed the farmers in the back,” he said.