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Cabinet approves subsidy for sugar exports by Rs 4,000 per tonne

Export incentive will be given for 14 lakh tonnes in 2014-15

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Prime minister Narendra Modi
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In a clear sign of the prime minister Narendra Modi-led NDA government warming to Nationalist Congress Party (NCP) supremo, the union cabinet on Thursday approved a subsidy up to 14 lakh tonnes of raw sugar to Rs 4,000 per tonne, to help the cash-starved sugar industry and farmers. The subsidy is believed to help industrialists pay arrears to the sugarcane farmers in Maharashtra sugar bowl, political stronghold of NCP chief.

Food minister Ram Vilas Paswan said the decision was necessitated because of estimates that another year of sugar supply glut was on the cards. Production in Maharashtra is estimated to rise 20 per cent to 9.3 mt in 2015 from 7.71 mt in the previous year. Towards the end of the current season, mills are expected to have about 2.5 mt of exportable surplus.

Paswan said export incentive can be given on 14 lakh tonne of raw sugar and it will go a long way helping farmers. India, the world's second-largest sugar producer, has an annual domestic requirement of 24.8 million tonne and production is pegged at 25 million tonne. Currently, there is capacity of carry-over stock of 7.2 million tonne. "Even if we keep six million tonne for three months' requirement, we have enough stock and hence can export," Paswan said.

Last year, Sharad Pawar, who was then agriculture minister in UPA government had to fight a hard battle to convince his cabinet colleagues more particularly then food minister K V Thomas and finance minister P Chidambaram to announce a subsidy of Rs 3,371 per tonne for exports of raw sugar until September 2014. Pawar had proposed Rs 4,000 per tonne subsidy, but was shot down in the cabinet. After several rounds of talks in group of ministers, and with Pawar citing Lok Sabha polls and then polls in Maharashtra, then UPA government had agreed to Rs 3,371 per tonne subsidy. The sugar industry sought continuation of the incentive, apart from bank loans, and was waiting for a notification on the subsidy. Thomas refused to give subsidy at beyond Rs 2,000 per tonne, leading to fire works between him and Pawar. Thomas had other tense relations also with Pawar, by referring him a "backstabber".

Modi recently showered praise on Pawar in Baramati, after inaugurating agricultural technology centre on Saturday. Praising Pawar, Modi said, "I keep talking with Pawar at least twice or thrice a month and we exchange notes on various issues faced by the country. We need to use Pawar's more than five decades (of) experience in the public life." "Whenever the UPA (United Progressive Alliance) government used to block schemes and projects related to Gujarat, as the chief minister I used to always seek help from Pawar and...he used to help me sort out my issues with the central government," claimed Modi.

Earlier, Pawar had also lavished generous praise on Narendra Modi-led NDA government saying that it is making "sincere efforts" to reach out to people. "The government appears to be sincere and intent on achieving a lot of things. One should give it more time and only then judge its performance," said NCP chief said last year in September.

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