New Delhi, Sep 12: Ahead of the assembly elections, the Union Cabinet chaired by Prime Minister Narendra Modi on Wednesday increased the price of ethanol by 25%. With the latest revision, the oil marketing companies will buy ethanol from sugar mills at Rs.52.43/litre, which was earlier at Rs.47.49/litre.

 The cabinet has also approved a new procurement policy under which one scheme will focus on compensating oilseeds farmers if rates fall below the MSP, and another will allow states to rope in private players for procurement.

In the budget this year, the government had announced that it will put in place a fool-proof mechanism to ensure minimum support price (MSP) to farmers. The government's approval of the new procurement policy for crops is believed to bring a  major relief to farmers. Earlier, the government had fixed the price for ethanol produced from sugar cane juice at 47.5 rupees a litre.

In its meeting, the cabinet also discussed the new minimum support price (MSP) options. In a bid to boost sugar mills, the Cabinet approved the 25% rise in the price for ethanol produced directly from sugarcane juice from Rs 47.5 per litre to Rs 59.5. According to reports, the government also aims to cut down crude oil import, which is on the rise, by increasing the blending of ethanol in petrol by 10%.

Soon after the government's decision, stocks including Shree Renuka Sugars, Empee Sugars, Gayatri Sugars, Triveni Engineering, Praj Industries gained 3-5 percent. The hike in ethanol price is aimed to help sugar mills, saddled with massive mounds of the sweetener, divert cane juice for ethanol production.

(The above story first appeared on LatestLY on Sep 12, 2018 03:44 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).