The Union government on Wednesday approved a Rs. 6,000-crore interest-free loan to the sugar industry to enable it to clear cane arrears to farmers that stand at Rs. 21,000 crore.
The Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, agreed to provide a one-year moratorium on loan repayment. It also decided to bear the cost of interest subvention, to the extent of Rs. 600 crore, for the period.
Sugar mills will prepare a list of farmers whose dues they have to clear and banks will transfer the amount to the Jan Dhan accounts of cane growers, Union Minister for Road Transport and Highways Nitin Gardkari told journalists after the Cabinet meeting. Earlier, millers were asked to pay off the dues to farmers.
“We have taken the decision in the interests of farmers,” the Minister said.
The CCEA also decided that the loans be given to units that cleared at least 50 per cent of their arrears before June 30. This is the second time that the Centre has given an interest-free loan to millers to clear arrears. In December 2013, the government gave an interest-free loan of Rs. 6,600 crore.
The move, however, did not go down well with the industry body — Indian Sugar Mills Association — which said this did not address the basic problem of surplus sugar and depressed prices. “To expect the industry to repay the loan after a year is expecting it to make profits to the tune of Rs. 6,000 crore within a year, which does not seem possible with a surplus stock of over 10 million tonnes and depressed sugar price,” ISMA director-general Abinash Verma said in a statement.
Govt. must buy surplus sugar: industry
The Union government’s decision to give a Rs. 6,000-crore interest-free loan to the sugar industry to help it clear arrears to farmers does not go down well with the industry body.
The Indian Sugar Mills Association said this did not address the basic problem of surplus sugar and depressed prices.
The industry, which is demanding the creation of a two million-tonne buffer stock of sugar on government account to reduce stocks, said a government agency like the FCI or MMTC, STC or APEDA could instead buy out 2.5-3 million tonnes of surplus sugar from the industry to help it reduce stocks and pay up the farmers.
Union Minister for Road Transport Nitin Gadkari told journalists after the Cabinet meeting that the Centre had already taken several measures, including an increase in sugar import duty to 40 per cent, raising export subsidy on raw sugar and an increase in ethanol prices to promote its blending with petrol.
It had also waived excise duties on ethanol in the next sugar season to further incentivise ethanol supplies for the blending program. This would enhance the ex-mill price of ethanol and help to improve the liquidity of the industry, sources said.
India’s sugar production is estimated to cross 28 million tonnes during the 2014-15 marketing year (October-September), against 24.3 million tonnes in the previous year. The total annual demand is put at 24 million tonnes.
Among the major sugar producing States are Uttar Pradesh, Maharashtra, Karnataka, Tamil Nadu, Andhra Pradesh, Telangana, Bihar, Gujarat, Haryana, Uttarakhand and Punjab.