Cabinet approves Rs 6,600 cr interest-free loans for sugar mills
Zee Media Bureau
New Delhi: The Cabinet on Thursday approved a proposal on providing interest-free loans of Rs 6,600 crore to the cash-starved sugar industry for making sugarcane payment to farmers.
The proposal was in line with relief measures recommended by the PM-constituted ministerial panel, headed by Agriculture Minister Sharad Pawar, to address the cash crunch facing sugar mills and their inability to pay higher cane prices this season.
Mills have cane arrear of Rs 3,400 crore. The remaining amount will be utilised for this year's payments.
Concerned that non-payment of cane arrears would increase farmers' woes ahead of the general elections, the ministerial panel on Wednesday met again to examine additional sops for millers to help improve their working capital.
Besides Pawar and Thomas, Finance Minister P Chidambaram, Petroleum Minister Veerappa Moily and Civil Aviation Minister Ajit Singh were present at the meeting.
The representatives from Indian Sugar Mills Association, National Federation of Cooperative Sugar Factories Ltd, and top officials of Shree Renuka Sugars, EID Parry's and Simbhaoli Sugars were also present in the meeting.
In the Cabinet note, the Food Ministry had proposed that loans worth Rs 7,200 crore would be provided by banks to the sugar mills exclusively for sugarcane payment.
Banks will lend equivalent to the excise duty paid by mills in the last three years, while the entire interest of 12 per cent would be borne by the Centre and Sugar Development Fund.
Mills would have to repay the loans in five years and can avail of a moratorium on repayment in the first two years.