New Delhi, Feb 28 (IANS) To facilitate payment of dues of sugar cane farmers for the current sugar season, the Cabinet Committee on Economic Affairs (CCEA) on Thursday approved the proposal to provide soft loans to the extent of about Rs 7,900-10,540 crore to the sugar industry.
“With a view to liquidate dues of sugarcane farmers, the government will bear the interest subvention cost up to 10 per cent to the extent of Rs 553 crore to Rs 1,054 crore for one year,” an official statement said after the CCEA meeting chaired by Prime Minister Narendra Modi.
The government has mandated that banks will obtain from the sugar mill, the list of farmers with bank account details with the extent of cane dues to be paid, so that the dues are directly paid into the accounts of the farmers on behalf of the sugar mills.
“Subsequent balance if any, will then be credited into the mill’s account,” it said.
In order to incentivise the mills to clear their dues, the CCEA also decided that the approved soft loans will be provided to those units which have already cleared at least 25 per cent of their outstanding dues in the sugar season 2018-19.
Surplus sugar production over domestic consumption requirement during the last sugar season 2017-18 (October 2017-September 2018) adversely affected the liquidity position of the sugar mills resulting in building up of cane price arrears of farmers which reached to an alarming level of Rs 23,232 crore in May 2018.
The government said that surplus production was estimated in the current sugar season 2018-19 which has also affected the liquidity position of sugar mills resulting in building up of cane price arrears of farmers which has reached to the level of Rs 20,159 crore as on February 22.
In order to improve liquidity of sugar mills to enable them to clear cane dues of farmers, the government increased minimum selling price of white sugar from Rs 29 per kg to Rs 31 per kg with effect from February 14.