Conditions for sugar mills to avail subsidy eased

New Delhi: The Cabinet Committee on Economic Affairs on Wednesday relaxed conditions for sugar mills to avail production subsidy, after taking into account low sugar output because of drought.

The conditions were also relaxed because the subsidy was withdrawn abruptly as sugar prices in retail markets had risen beyond a reasonable limit. As the production subsidy scheme was withdrawn before schedule, mills that had met at least 50 per cent of their export target and mills with distillation capacity that have supplied ethanol in line with the revised schedule, would be eligible for the subsidy, an official statement said. Earlier, this subsidy was given to mills that exported their full quota and those who entered into ethanol delivery contracts with OMCs or oil marketing companies.

The subsidy was initially calculated based on the estimated cane crushing of 255 million tonnes in 2015-16. But, the crushing has come down due to drought.

"However, production subsidy on actual cane crushing would be provided to sugar mills proportionate to their achievement on export and ethanol supply targets with equal weightage," the statement clarified.

Consequently, sugar output is estimated to be lower at 25.2 million tonnes this season. With the revised formula, the subsidy outgo to sugar mills would come down to Rs 600 crore as against previously estimated Rs 1,147.5 crore, sources said.

The Centre last year had announced a subsidy of Rs 4.5 per quintal of cane crushed during October 2015-September 2016, with a condition that mills meet the export quota of four million tonnes and the ethanol-blending target.

Centrally sponsored schemes

The Union Cabinet also approved the recommendations of a group of chief ministers for cutting the Centrally Sponsored Schemes (CSS), from the existing 66 to just 30.

That apart, all the 30 schemes were classified into three categories: Core schemes, core of core schemes, and optional schemes. In the core schemes, which included high priority ones like MGNREGS (Mahatma Gandhi National Rural Employment Guarantee Scheme), National Social Assistance Programme (NSAP), the existing funding pattern would continue - many of these programmes are majorly funded by the Centre.

In the second category of schemes, which were called the core schemes, the funding pattern was 60:40 between the Centre and states and for north-east and Himalayan region it was 90:10. Pradhan Mantri Kaushal Vikas Yojana, National Rural Livelihoods Mission, among others, are part of this category.

The third category of schemes include optional schemes which include Shyama Prasad Mukherjee Rurban Mission, and would be optional for the states to implement or not. The funding for these schemes would be 50:50 between the Centre and states. That apart, the Centre has also given all states flexi-funding of 25 per cent in each scheme to enable them to tailor the programme in line with their need.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.