New Delhi: With sugar prices rising after the Centre rolled out incentives for the industry, Food Minister Ram Vilas Paswan on Wednesday blamed the increase on market speculation and said surplus stocks will help stabilise rates.
Paswan, who announced a decision to more than double import duty on sugar to 40 percent this week, said India does not depend on imports to meet its requirement of the sweetener and the proposed duty should have no impact on prices.
In an interview to PTI, Paswan said while the Centre was doing its bit to give additional interest-free loans to sugar mills to clear dues to cane farmers, the crisis facing millers in Uttar Pradesh was due to policies followed by the state government.
"When we have surplus sugar of 20 lakh tonnes, there is no question of price rise. It is all due to speculation. Prices will stabilise soon," he said.
Sugar prices have risen by Rs 2-3 per kg in the national capital since Monday's announcement. Sugar is available at Rs 35-36 per kg and Rs 40-41 per kg in wholesale and retail outlets, respectively.
"Cane arrears have increased from Rs 11,000 crore to Rs 13,350 crore across the country. Mills are on the verge of shutdown due to many reasons. The decision taken on June 23 was basically intended to ensure that mills are able to clear cane arrears to growers," Paswan said.
To improve the cash flow of mills, the Centre decided to give them up to Rs 4,400 crore in extra interest-free loans, hike import duty to 40 percent from 15 percent, extend export subsidy of Rs 3,300 per tonne till September and raise mandatory ethanol blending with petrol to 10 percent from the existing 5 percent.
Refuting allegations that the package was announced solely for the benefit of millers, Paswan said the Centre's decision was to protect farmers by ensuring they get payments for the sugarcane sold to factories.
Paswan said: "Arrears have not been paid to growers in Uttar Pradesh for last three years. There are reports that UP has inventory worth Rs 14,000 crore, while the outstanding payments are only Rs 7,200 crore."
He said it has come to the government's notice that some UP mills are not paying arrears even after availing of the first tranche of Rs 6,600 crore interest-free loans announced by the Centre last year.
"We are aware of this. That is why we have decided to notify incentives only if mills give a concrete assurance that they will clear arrears on priority. The industry body ISMA has not yet given any undertaking in this regard," he said.
Paswan also said the proposed incentives are being given to revive ailing sugar mills that are on the brink of closure. Currently, about 500 of about 700 registered mills in the country are operational.
The Ministry of Consumer Affairs, Food and Public Distribution will soon write to the UP Secretary and the Cane Commissioner to implement the recent decisions and ensure that mills pass on the benefits to farmers, he said.
Besides, a meeting of state consumer affairs ministers will be called on July 4 to discuss rising prices of sugar, onion, potato and other food commodities, he added.
Refuting allegations that the proposed incentives are against the Rangarajan report on sugar decontrol, Paswan said, "The sector is decontrolled. We have implemented most of the recommendations such as giving freedom to mills to sell sugar in the open market."
Some recommendations, including linking sugarcane prices with realisations, have to be implemented by states.
"The state governments have to take a call on this issue," he added.
India is the world's second-biggest sugar producer and largest consumer of the sweetener.
