Niti Aayog task force has recommended linking of sugarcane prices to sugar rates to keep the industry in sound financial health. It has also pitched for a one-time increase in minimum sugar price to Rs 33 per kilo to help sugar mills cover the cost of production.The task force also recommended shifting of some areas under sugarcane cultivation to less water-intensive crops by providing suitable incentive to farmers. "The task force further said the government should target moving about 3 lakh hectares area under sugarcane, which yields about 20 lakh tonnes of the crop, to other crops.The task force feels that a compensation of Rs 6,000 per hectare could be given as additional incentive to farmers for alternate cultivation patterns that are less water intensive than sugarcane," it said.The task force noted that due to stagnation and/or declining sugar prices, the liquidity position of the mills has remained a major cause for concern, prompting the government to come out with various liquidity support measures from time to time.
"It is proposed to levy cess on sugar at Rs 50 per quintal for a period of 3 years, during which about Rs 4,500 crore would be added to the fund, which will help provide bridge funding or act as a comfort for banks providing soft loans to mills for improving technologies and paying dues to their farmers," the panel said.
Sugarcane and sugar play significant role in the economy of India. Sugar is the country's second largest agro-based industry, next to cotton.