A shell-shocked BJP is set to announce an Rs 8,000 crore package for the sugar industry which will also boost the grief-stricken cane growers.
The party lost the by-poll in Kairana which falls under the state's sugarcane belt.
The sugar industry is facing problems due to record production of sugarcane that has led to a massive dip in the price of the sweetener. The sugar mills are grappling with payment of arrears to cane growers that have ballooned to the tune of Rs 22,000 crore.
The package is expected to be a mix of relief measures, comprising a minimum selling price for sugar, incentives for expansion of capacity for ethanol and creation of a three-million-tonne buffer stock of the sweetener, officials said.
The comprehensive package is expected to cost the government Rs 8,000 crore, officials said.
The government is also understood to have decided on a minimum price for the sale of sugar at around Rs 29 per kg, which will help mills clear dues to the farmers.
Currently, the ex-mill price of sugar is in the range of Rs 25-26 per kg, which is well below the cost of production.
Money for the creation of the buffer stock will be directly transferred to the bank accounts of the farmers.
The decision about the relief package comes on a day when Uttar Pradesh Chief Minister Yogi Adityanath had a meeting with BJP president Amit Shah to assess the party's defeat in the recent by-polls to the Kairana parliamentary seat and the Noorpur Assembly seat.
The package will also include a Rs 4,400 crore scheme for increasing the ethanol capacity in the country. The move is expected to help in the diversion of sugarcane for production of ethanol in surplus season and also facilitate timely payment of dues to the farmers.
The government had already increased the customs duty on import of sugar from 50% to 100%, imposed reverse stock-holding limits on sugar mills for the months of February-March, besides announcing a production subsidy at the rate of Rs 55 per tonne of cane that is crushed.
At the same time, the government will put in place a mechanism to ensure that the retail prices of sugar are kept fully under control and sufficient supplies are maintained throughout the year.