MUMBAI, August 13: In an effort to arrest the drastic recession and improve the plummeting sugar production this year, the Union Government has announced an incentive scheme for sugar factories going into production during the early crushing period.

The Union Ministry of Food & Consumer Affairs has issued a circular dated July 24 announcing hike in the free sale quota of sugar by 12% as an incentive for the factories to go into production before the festival season.

The circular, applicable to all the sugar factories, is expected to help the Maharashtra co-operative sugar industry tiding over the recession crisis it is currently going through.

The cane production in Maharashtra is unlikely to cross even 28 lakh tonnes as against 34 lakh tonnes in '96 and 54 lakh tonnes in '95. The industry has been going through a crushing cycle of recession with about 25 co-operative sugar factories in the State completely suspending crushing this season and more than 80 per cent factories incurring losses.

According to the circular the production achieved between Aug 1, and November 15, this year would be entitled for 72 per cent of free sale quota against 60 per cent granted normally.

The Government's circular provides for the same facility to new sugar factories which were entitled for 100 per cent free sale quota under the last year scheme provided they produce more sugar than 27,500 tonnes for the whole season.

The scheme is applicable to even those sugar factories which were entitled for incentives of higher free sale quota for the expansion project they had taken up. The reported drop in the sugar production may severely affect the State exchequer as the revenue is expected to go down at least by Rs 700 crore, Mantralaya sources said. The Chief Minister Manohar Joshi has been giving audiences to sugar barons for a solution.

Meanwhile, the sugar barons in Maharashtra have also intensified their drive for a complete overhaul of the laws governing sugar industry. The federation of co-operative sugar factories had submitted a memorandum to the Prime Minister in May followed by a 50 page reply to the queries raised by panel on the sugar industry appointed by the Union Government.Y

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.