The report of the NITI Aayog panel, headed by Ramesh Chand, has recommended linking of sugarcane prices to sugar rates to ensure the financial stability of the industry. Considering the production cost of sugar mills, the panel also suggested a one-time hike in minimum sugar price to Rs. 33 per kg.
Key recommendations
The report received the nod in March this year but published recently.
- The one time increase in sugar price will lessen the burden of the production and maintenance cost of the mills.
- It recommended the introduction of the Revenue Sharing Formula in association with a Price Stabilisation Fund to ensure price matching with FRP (Fair and Remunerative Price).
- Periodic revision of Minimum Support Price for sugar after 6 months.
- Adoption of alternative patterns of cultivation by shifting sugarcane to less water-intensive crops.
- Setting up a fund with Rs. 50 per quintal cess on sugar for financial support to sugar mills considering future outcomes.
What is the Revenue Sharing Formula?
Revenue sharing formula is an instance of fiscal federalism. The Central and state government make an understanding by sharing the tax on certain things in a pre-fixed ratio.