The decision had caused severe heartburn among the sugar millers who had felt that the hike in the reserved quota would impact their cash flow and also effect their cane payments to farmers.
The Uttar Pradesh government on Friday approved the molasses policy for 2019-20 in which it hiked the molasses reserved quota for manufacturers of country liquor from 16% to 18%.
The decision was taken by the state cabinet here on Friday to maintain adequate supply of molasses for distilleries to produce cheap countrymade liquor for the lower strata of society.
Briefing the mediapersons, principal secretary excise Sanjay Bhoosreddy said another major change in the policy would be that sugar mills having captive distilleries, which were hitherto exempted from the levy molasses, would now have to have to part with 18% for the country liquor industry.
“We are expected a production of 5 lakh quintal of molasses this year. In order to provide safe and cheap countrymade liquor to the poorer sections of the society, which would otherwise consume illicit liquor, it is important that the country liquor sector is provided adequate levy molasses. For the excise year 2019-20, the state is expected to produce 500 lakh quintal of molasses and the country liquor sector would require 91.15 lakh quintal.
In order to ensure that they are provide with as much, the government has fixed 18% of the total molasses production as levy,” he said, adding that accordingly, sugar mills would comply with 1:4.56 dispatch proportion between reserved and unreserved molasses.
It may be mentioned that barely only two months ago, in September, the state government revised the molasses reserved quota from 12.5% to 16% due to an overall shortfall in the molasses production from the estimated 550 lakh quintal to about 470 lakh quintal.
The decision had caused severe heartburn among the sugar millers who had felt that the hike in the reserved quota would impact their cash flow and also effect their cane payments to farmers. They had also argued that the state government’s decision would put the Centre’s ambitious ethanol-blending programme in jeopardy as the availability of free molasses would be squeezed to a large extent.
It may be mentioned that the non-levy molasses, which is market-driven, fetches the sugar mills `550/quintal while the levy sugar price has been fixed at a subsidised rate of Rs 75/quintal.
Claiming that the levy molasses is squeezing the mills of their cash flows, leading to a huge pile up of cane dues, the sugar industry has been demanding that the state government abolish the system of reserving molasses for distilleries.
“The state government should stop reserving molasses for the country liquor industry. Like any other industry, it is a commercial entity and should be buying molasses from the open market. Subsidising one industry at the cost of another by the government is not fair, especially when we are not being able to pay the cane farmers their dues on time,” said a miller, requesting anonymity.