The Cabinet Committee on Economic Affairs (CCEA) is scheduled to meet on Tuesday, June 5, 2018, to decide on the bailout, as per the media sources.
The softening of domestic sugar prices on account of record sugar output has resulted into operating losses for the sugar mills. This has led to spike up in the arrears payable to the farmers for the sugarcane purchased by the sugar mills.
The bailout package for ~5 crore sugarcane farmers is also a key proposition for the existing government from the viewpoint of 2019 general elections. This would be an influential move under the political lobby.
Government had also announced a subsidy for sugarcane farmers and stockpile build-up for sugar to cut surplus in the market.
India’s sugar output is likely to scale record highs in the next marketing season, with farmers choosing to plant the crop despite falling prices and ~Rs20,000cr in delayed payments from mills for the current harvest.
Also read: Sugar Sector Turns Sour; Why sugar stocks are falling?