Cutting Sugar Subsidy
The central government has cut the subsidy on sugar exports from Rs 6,000 per tonne to Rs 4,000 per tonne.
The decision is taken in light of the firm global prices due. Higher subsidy was offered to the sector to promote export, helping the mill owners to clear their dues to farmers.
India is set to register its highest ever sugar export during the current crop year. The country has already exported 5.7 mn tn of sugar by May 2021 against the target of the 6.0 mn tn for the year. Hence, India is comfortably placed for the current crop year, which ends in September.
Since export targets are already achieved, the government would want to use funds in other sectors where it is needed the most. Like, in the fertilizer sector, where the cabinet has extended the subsidy benefits.
Another reason could be the elevated sugar prices in the global market which would ensure the sustained margins for Indian sugar mills even without the help of subsidy.
Edible Oil Prices To Reduce?
Prices of palm oil, a key ingredient for edible oil, have increased by 40-50% in the past eight months. It has impacted the prices of edible oils, which have been in upward territory ever since. An Economic Times report suggests that imported crude palm oil prices have gone up to $1,250 per tonne from $800 per tonne in the last eight months.
The trend has been similar in soybean and sunflower oils as well. Imported soybean oil has also moved up to $1,425 per tonne from $800 per tonne. And sunflower oil has moved to $1,600 per tonne from $1,250 per tonne in the last eight months.
Volatile commodity prices have kept the edible oil prices in an upward territory. However, now there is a possibility for it to cool off from the highs as China is likely to reduce palm oil imports. Besides that, the FMCG industry has also proposed the government reduce import duty on edible oils.
Government's Stake Sale in Axis Bank
The government has sold a 1.95% stake in Axis Bank held through SUUTI. It has managed to garner Rs 4,000 crore via stake sale.
The government sold around 5.80% stake in Axis Bank through the Specified Undertaking of the Unit Trust of India (SUUTI). For that, an offer for sale was issued at a floor price of Rs 680 a share.
SUUTI is a Specified Undertaking of Unit Trust of India. The government was planning to sell its SUUTI stake in Axis Bank for a long time. Finally, it has taken place this year.
There is strong speculation that ITC could be next in line where the government could offload its stake held via SUUTI. However, no concrete information is available yet on this front.