New Delhi, Oct 03: The Centre today allowed state governments to raise additional market borrowings through bonds to help sugar mills clear the sugarcane arrears for 2002-03 season. The state governments would be given support from the Sugar Development Fund (SDF) to meet the interest liability to the extent of difference between the coupon rate on the bonds raised through the additional market borrowings and 4 per cent, which is the rate at which loan is being extended to the sugar mills.

After a cabinet meeting, Parliamentary Affairs Minister Sushma Swaraj said that the state governments would in turn extend 10 year loan to the sugar mills with a ceiling interest rate of 4 per cent per annum.

This loan will have moratorium on repayment of principal and interest for a period of 5 years and would, thereafter, be repaid in five equal instalments.
This would be available to all sugar mills in non-state administered price (sap) states and to the mills in the cooperative and public sectors in the sap states.

Any additional benefit which a state government may wish to provide would be to the charge of the state government concerned.
Bureau Report