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% 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/kg in the national capital since Monday's announcement. Sugar is available at Rs 35-36/kg and Rs 40-41/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% from 15%, extend export subsidy of Rs 3,300 per tonne till September and raise mandatory ethanol blending with petrol to 10% from the existing 5%.
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.