The government on Wednesday may take a decision to hike the minimum selling price of sugar by Rs 2 per kg to Rs 33 per kg from the existing Rs 31 per kg.
According to sources, a Group of Ministers headed by Home Minister Amit Shah, which is scheduled to meet on July 15, may approve a proposal of raising the minimum selling price of sugar. The proposal has been moved by the Ministry of Consumer Affairs, Food and Public Distribution.
The government think tank, NITI Aayog too has favored a hike in the minimum selling price of sugar.
The move comes at a time when the dues of sugarcane farmers have reached to around Rs 22,000 crore in June this year and the ex-mill prices of sugar have dropped to Rs 31-31.50 per kg during lockdown. However, the demand has started picking up after unlockdown and sugar prices too have improved marginally.
According to the Indian Sugar Mills Association (ISMA), sugar production in the country during 2020-21 is estimated to be around 305 lakh tones. This means that there will be surplus sugar availability during the coming season, which typically begins from October.
The last time the government hiked the minimum selling price of sugar was in February this year when it was increased to Rs 31 per kg.
In June 2018, the Centre had introduced the concept of fixing the minimum selling price of sugar to help sugar mills in paying the dues to sugarcane farmers.
Issuing an order under provisions of the Essential Commodities Act, 1955, the government had fixed Minimum Selling Price (MSP) of white/refined sugar at Rs. 29/kg with effect from June 7, 2018.
While fixing the minimum selling price of sugar, the centre takes two factors into account: the components of Fair & Remunerative Price (FRP) of sugarcane; and minimum conversion cost of the most efficient mills.
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