Govt clears Rs. 6,000-crore soft loans for sugar mills.

The government will provide soft loans of Rs. 6,000 crore to sugar mills to help them clear part of their Rs 21,000-crore dues to farmers. But many in the sugar industry are not liking the fact that this payment is going to be made directly to farmers' bank accounts, through the Pradhan Mantri Jan Dhan Yojana to the extent possible.

The Cabinet Committee on Economic Affairs (CCEA) on Wednesday decided that the government would not charge any interest on the loan for a year, itself bearing the burden of about Rs 600 crore.

However, there is another catch as well: These loans will be provided only to those units that have cleared at least 50 per cent of their outstanding arrears by June 30.

“Mills have not been able to make payments to farmers because of low domestic prices and high production. Cane arrears have reached Rs 21,000 crore,” Union Road Transport Minister Nitin Gadkari said after the Cabinet meeting.

The government has mandated that banks will obtain from sugar mills a list of farmers, with bank account details and the extent to which cane dues are to be paid. The idea is to make direct transfer of dues to the bank accounts of farmers on behalf of sugar mills. Subsequent balance, if any, would then be credited into account of the mill concerned, Gadkari said.

But the method seems to have irked the sugar industry. “Companies will have to carry the burden of this additional loan on their books and pay regular interest (after one year). Also, when the payment is made directly to the farmer, why should industry take the debt burden? They should just pay it off as a welfare scheme from the Government of India,” said Rajshree Pathy of Rajshree Sugars and Chemicals Ltd.

In fact, it was not for the industry that the government was providing this soft loan; it was for farmers, Gadkari explained. “This decision is not to support the industry. We are keeping farmers’ interests in mind.”

BS