The Indian government said it has managed to reduce the cane price arrears to Rs 2,700-crore compared to Rs 21,000-crore for the year 2014-15, helping the industry improve its liquidity.
“The measures taken by the Government to improve liquidity of the sugar mills enabling them to clear cane price dues of farmers, have a salutary effect on reduction of cane price arrears for 2014-15 sugar season which has come down from Rs. 21,000 cr to about Rs 2,700 cr as on 12.01.2016, even below the arrears in the corresponding period in last sugar season,” a government statement said.
It said sustained surpluses of production over domestic consumption in the last 5 years has led to subdued sugar prices, leading to build up of cane price arrears. During 2014-15 sugar season the peak cane price arrears were Rs. 21,000.
Government initiatives such as incentives on raw sugar export, soft loan, fixed remunerative price for sugarcane, waiver of excise duty on ethanol and a production subsidy to sugar mills to offset cost of cane and facilitate timely payment of cane price dues had helped improve liquidity position of sugar mills, enabling them to clear cane price dues of farmers, the statement added.