The government panel has decided to recommend special incentives to dissuade farmers from growing sugarcane in water-scarce areas during the rising fiscal burden and depletion of water tables.
According to an official source, the task force headed by NITI Aayog is likely to propose an incentive of Rs 6,000/acre for farmers in a year to not grow cane in states like Uttar Pradesh and Maharashtra. The idea is to bring down the area under sugarcane cultivation by about 20% or thereabouts, the source told FE. On average, over 48 lakh hectare of cultivable land has been under sugarcane farming in the last five years.
During the FY 2018-19, the cane area was 55 lakh hectare. In terms of area under sugarcane cultivation, UP tops with 22 lakh hectare, followed by Maharashtra (9 lakh hectare), Karnataka (4 lakh hectare) and Bihar (2.5 lakh hectare).
The reason for farmers in water-scarce regions sticking to sugarcane farming is the support prices, assured market, and profitability ensured by the Centre and state governments.
Even as large parts of the country witness acute water scarcity and depletion of water tables, agriculture consume a disproportionate more than three-fourths of the country’s freshwater resources. And 60% of irrigation water is used for rice and sugarcane, the two most water-guzzling crops.
While the Centre has tried to help the sugar industry clear cane dues in recent years through packages, including loans and interest subsidy, the steps have failed to prevent arrears from piling up at regular intervals when sugar prices drop. On top of that, the food ministry last year reintroduced the sales quota system from June, impeding mills’ ability to cut inventory and clear cane arrears fast.
Cane dues stood alarmingly high at Rs 17,518 crore as of mid-July this year, with UP alone accounting for 57% of arrears. On August 28, the Centre announced a Rs 6,268-crore subsidy for export of six million tonnes of sugar during the 2019-20 marketing year starting October in order to liquidate surplus domestic stock and help mills clear huge sugarcane arrears to farmers.
