Govt. disbursed soft loans of Rs 7,402 cr to sugar mills to clear cane dues of farmers

Speed Post News Network

New Delhi : The Union Government in 2019 disbursed soft loans of about Rs 7,402 crores to sugar mills to enable them clear cane dues of farmers for sugar season 2018-19

Excess production during the sugar season 2017-18 and sugar season 2018-19 has been continuously depressing the ex-mill price of sugar. This has adversely affected the realisation on sale of sugar resulting in accumulation of cane price arrears of farmers for sugar season 2018-19, which reached to an alarming level of about Rs 28,390 crore in April, 2019.

In order to stabilise sugar prices at reasonable level and to improve liquidity of sugar mills enabling them to clear cane price dues of farmers, the Central Government took following steps during 2019: In order to prevent cash loss and to facilitate sugar mills to clear cane dues of farmers in time, the Government on June 7, 2018, fixed a minimum selling price (MSP) of sugar at Rs 29/kg for sale at factory gate in domestic market, below which no sugar mill can sell sugar. The Government has further increased MSP of sugar from Rs 29/kg to Rs 31/kg with effect from February 14, 2019; The Government also notified a soft loan scheme on March 2, 2019,  for extending loans to sugar mills through banks to clear cane dues of farmers for sugar season 2018-19, for which Government would bear interest subvention of about Rs 738 crore @ 7% for one year. Under the scheme, soft loans of about Rs 7,402 crores have been disbursed to sugar mills to enable them  clear cane dues of farmers for sugar season 2018-19.

With a view to supporting sugar sector and in the interest of sugarcane farmers, the Government notified two schemes on March 8, 2019, for extending soft loans of about Rs 15,500 crore through banks to sugar mills and molasses based stand alone distilleries for enhancement and augmentation of ethanol production capacity for which Government would bear interest subvention amounting to Rs 3,355 crores for five years including moratorium period of one year.

As the current sugar season 2019-20 commenced with huge carry-over/opening stock, which may affect the liquidity position of sugar mills, in order to maintain demand supply balance, to stabilise sugar prices and to improve liquidity position of sugar mills enabling them to clear cane price dues of farmers, the Government notified a scheme on July 31, 2019, for creation and maintenance of buffer stock of 40 LMT of sugar for a period of one year from August 1, 2019 to July 31, 2020, for which Government is reimbursing carrying cost of Rs 1,674 crore towards maintenance of buffer stock.

With a view to facilitating export of sugar during the sugar season 2019-20, the Government vide notification dated September 12,  2019, notified a scheme for providing assistance to sugar mills to meet expenses on export of 60 LMT of sugar to the extent of Maximum Admissible Export Quantity (MAEQ) for sugar season 2019-20. Under the scheme, Government would be providing a lump sum assistance @ Rs 10,448/MT to sugar mills to facilitate export in sugar season 2019-20 for which an estimated expenditure of Rs 6,268 crore would be borne by the Government, according to a PIB release.

The Government has allowed production of ethanol from sugar and sugar syrup for current ethanol supply year 2019-20 (December,2019 – November,2020) and has fixed the remunerative ex-mill price of ethanol derived from C-heavy molasses @ Rs. 43.75/litre; from B-heavy molasses @ Rs. 54.27/ litre and @ Rs. 59.48/litre for the ethanol derived from sugarcane juice/ sugar/ sugar syrup.

As a result of various measures, about 94 % of cane dues for sugar season 2018-19 have been cleared and all-India cane price arrears of farmers have also come down to Rs 5,134 crores (as on December 18, 2019) from peak arrears of Rs 28,390 crore on State Advised Price (SAP) basis; and to Rs 3,095 crore from peak arrears of Rs 25,434 crore on FRP basis.

A web portal has been launched for online submission of loan applications for availing various loans provided under Sugar Development Fund (SDF) by the Sugar Mills.