Ahead of the elections, the government on Wednesday approved yet another bailout package for the sugar sector by way of increased production assistance and transport subsidy to mills exporting the sweetener.

The Cabinet Committee on Economic Affairs approved a Rs 5,538 crore package as part of a comprehensive policy for the sugar industry that is dealing with surplus domestic stocks.

As of May 2018, sugar mills owe Rs 23,232 crore in arrears to cane growers mainly due to depressed market sentiments and crash in sugar prices.

As part of the policy, the government will provide financial assistance of Rs 13.88 per quintal cane crushed in 2018-19 marketing year to offset the cost of cane, as against Rs 5.50 per quintal announced for the current 2017-18, ending this month.

“The total expenditure on this account would be about Rs 4,163 crore,” Finance Minister Arun Jaitley told reporters here.

Besides, the Centre will also pay transport subsidy of Rs 1,000 per tonne for mills located within 100 km from the ports, Rs 2,500 per tonne for mills located beyond 100 km from the port in the coastal States and Rs 3,000 per tonne for mills located in other than coastal States or actual expenditure, whichever is lower.

The total expenditure on this account would be about Rs 1,375 crore, the statement said.

Earlier, the Centre had announced higher price for ethanol directly produced from sugarcane, financial assistance to mills to augment ethanol production capacity, creation of buffer stock of three million tonnes, and easing of levies on the sweetener.

Food and Consumer Affairs Minister Ramvilas Paswan said the CCEA decision will help stabilise the domestic market and enable mills to make cane payment to growers.

India witnessed a record sugar production of 32 million tonnes in 2017-18 and mills were left with a closing stock of 10 million tonnes. The industry is expecting further increase in sugar production in 2018-19 to 35 million tonnes.