The Cabinet Committee on Economic Affairs on Wednesday relaxed conditions for sugar mills to avail production subsidy, after taking into account low sugar output because of drought.
The conditions were also relaxed because the subsidy was withdrawn abruptly as sugar prices in retail markets had risen beyond a reasonable limit. As the production subsidy scheme was withdrawn before schedule, mills that had met at least 50 per cent of their export target and mills with distillation capacity that have supplied ethanol in line with the revised schedule, would be eligible for the subsidy, an official statement said. Earlier, this subsidy was given to mills that exported their full quota and those who entered into ethanol delivery contracts with OMCs or oil marketing companies.
The subsidy was initially calculated based on the estimated cane crushing of 255 million tonnes in 2015- 16. But, the crushing has come down due to drought.
“However, production subsidy on actual cane crushing would be provided to sugar mills proportionate to their achievement on export and ethanol supply targets with equal weightage,” the statement clarified.
Consequently, sugar output is estimated to be lower at 25.2 million tonnes this season.
With the revised formula, the subsidy outgo to sugar mills would come down to ₹ 600 crore as against previously estimated ₹ 1,147.5 crore, sources said.
The Centre last year had announced a subsidy of ₹ 4.5 per quintal of cane crushed during October 2015- September 2016, with a condition that mills meet the export quota of four million tonnes and the ethanol- blending target.
Centrally sponsored schemes
The Union Cabinet also approved the recommendations of a group of chief ministers for cutting the Centrally Sponsored Schemes ( CSS), from the existing 66 to just 30.