Exactly a week ago, last Monday, sugar prices jumped by Rs 30-40 a quintal in the wholesale spot market, after the Centre’s decision to raise import duty on sugar to 40 per cent. Likewise, naka prices and mill tender rates also shot up by Rs 20-50 a quintal. The volume also increased as retailers came forward with fresh orders in the markets and stockists made fresh commitments with producers. Prices in the futures market went up by Rs 50-60, crossing the Rs 3,100 level.
The new government hopes that surplus stocks will help stabilise rates and there is enough surplus. India does not depend on imports to meet its requirement of the sugar and the proposed duty should have no impact on prices, union food minister Ram Vilas Paswan said. The Centre is also 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.
Following the recent price rise of Rs 2-3/kg in the national capital, 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. According to government officials, the decision aimed at ensuring that mills are able to clear cane arrears to growers.
To improve the cash flow of the mills, the Centre has simultaneously decided to give them upto Rs 4,400 crore in extra-interest free loan, hike import duty to 40 per cent from 15 per cent, extend support subsidy of Rs 3,300 per tonne till September and raise mandatory ethanol blending with petrol to 10 per cent from the existing 5 per cent. The Centre's decision was to protect farmers by ensuring they get payments for the sugarcane sold to factories.
The decision of the Centre to allow export subsidy on sugar till September end only, has, in turn, left the industry in the lurch as prices of the commodity are expected to plummet during the Diwali festival. The Union food minister’s decision is not clear as he has not stated whether the export subsidy will continue after September or not.
Interestingly, the former union agriculture minister Sharad Pawar (in the UPA-II regime) had stipulated the time limit for export subsidy till September 2015. It had also been decided that the subsidy would be reviewed in lieu of the international market rate of sugar and the value of the dollar. By contrast, the high-level committee under the present union food minister Ramvilas Paswan has ignored the formula to calculate the subsidy amount.
Paswan on his parts, attributed the recent spurt in price of essential commodities mostly to speculation, hoarding and creation of a fear psychosis due to low rains.
While the Narendra Modi government promises steps against speculators, black marketers and hoarders, there is no doubt whatsoever that the weakest start to India’s monsoon season in at least five years is delaying planting of crops, threatening to push up food prices in India. According to the latest estimate on the of the India Meteorological Department (IMD) rainfall is 38 per cent below a 50-year average since June 1, the least since 2009. According IMD, the monsoon, stalled over India’s western and central regions since June 15, may not progress further before the beginning of July.
With more than 80 per cent of India getting limited rain, delayed sowing may lead to a decline in crop areas and yield. IMD however given some hopes that rainfall is likely to improve substantially in July and August, though the monsoon has been delayed. While stating the monsoon was expected to improve after July 7, agriculture minister Radha Mohan Singh said that the government was fully prepared to handle the situation in case of poor rainfall.
Source:- mydigitalfc.com
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