The government’s decision to provide up to Rs 10,540 crore as soft loans to sugar mills will help them in clearing arrears of cane growers by about Rs 9,000 crore, a top industry official said on Friday.
Indian Sugar Mills Association (ISMA) Director General Abinash Verma said mills interest burden will reduce by Rs 800-900 crore with government providing the interest subvention.
Sugar cane arrears to farmers have crossed Rs 20,000 crore in the current marketing year 2018-19 (October-September).
“Since the soft loans approved by CCEA for the sugar industry will be over and above the existing loans, the same will help reduce cane price arrears to the extent of around 8000-9000 crore. The interest subsidy of 7-10 per cent will reduce expenditure of 800-900 crore on account of interest burden of mills,” Verma told.
“One needs to see how the sugar mills with distressed balance sheets manage to get the loans, especially because they are the ones who have not been given working capital loans by banks and have the highest arrears of farmers,” he added.
Overall, Verma said it is a good move from the government to help the farmers get cane price payments.
The government on Thursday announced a soft loan of up to Rs 10,540 crore to the sugar industry to help mills clear mounting arrears to cane growers, a move that would cost exchequer up to Rs 1,054 crore as interest subsidy.
“To help the sugar industry clear its cane dues arrears, the Cabinet Committee on Economic Affairs (CCEA) approved the proposal to provide soft loans to the extent of about Rs 7,900-10,540 crore to the sugar industry,” an official statement said.
The Centre will bear the interest subvention cost at the rate of 7-10 per cent to the extent of Rs 553 crore to Rs 1,054 crore for one year.
To ensure that farmers are paid their dues expeditiously, the Centre has asked banks to seek bank account details of cane growers from mill owners, so that amount is paid directly to farmers.