CCEA approves Rs 6,600 cr interest-free loans for sugar mills

The CCEA also extended sugar exports without quantitative restrictions for the year that started in October 2013.

hidden December 19, 2013 21:50:15 IST
 CCEA approves Rs 6,600 cr interest-free loans for sugar mills

New Delhi: The government today decided to provide interest-free loans of Rs 6,600 crore to cash-starved sugar mills to make payments to cane farmers.

The entire interest burden, estimated at Rs 2,750 crore over the next five years, will be borne by the government, according to sources.

"The Cabinet Committee on Economic Affairs (CCEA) has approved Rs 6,600 crore interest-free loans to the sugar industry. The interest subvention will be 12 percent, which will be borne by the Sugar Development Fund," Food Minister KV Thomas said.

 CCEA approves Rs 6600 cr interestfree loans for sugar mills

New hope for sugar mills. AFP

The food ministry proposal before the CCEA was based on the recommendations of the informal group of ministers, which was set up by the prime minister under the chairmanship of Agriculture Minister Sharad Pawar to address the industry's cash crunch.

The loans will be provided by banks to sugar mills exclusively for making payments to sugarcane farmers, including arrears. The loans are equivalent to the excise duty paid by the mills in the past three years.

Mills have to repay the loans in five years and can avail of a moratorium on repayment for the first two years.

The ministry had originally proposed that 7 percent of the interest burden would come from the Sugar Development Fund and the rest from the exchequer, which the CCEA revised.

The Rs 80,000 crore sugar industry has been facing a cash crunch due to higher cost of production and lower selling prices in the wake of surplus output over the past few years.

Indian Sugar Mills Association (ISMA) Director General Abinash Verma hailed the government's decision to provide interest-free loans.

"The loans will have to be used to pay cane price of farmers, will ensure timely payment to the farmers to that extent at least, including the clearance of past cane arrears of Rs 3,000 crore," Verma said.

"It's a wonderful gesture by the Central government for both the farmers and the industry at the same time. It will help the industry reduce around Rs 500 crore annually of interest burden in the next five years," he added.

The CCEA also extended sugar exports without quantitative restrictions for the year that started in October 2013.

Other recommendations of the ministerial panel that are yet to be considered include the recasting of loans taken by mills, sops to produce 4 million tonnes of raw sugar, setting up a buffer stock and doubling of ethanol blending in petrol to 10 percent.

Giving details on sugar exports, Information and Broadcasting Minister I&B Manish Tewari said the CCEA has approved the proposal the Department of Commerce to continue the shipments, without any quantitative restriction, in view of the surplus availability of sugar in the domestic market.

There will be no financial outgo on the part of the government of India on account of this approval, an official statement said.

"This is expected to give a positive signal to exporters and the international community on the efforts of the government of India to pursue a stable, long term and consistent export policy regime in the agriculture sector," it added.

PTI

Updated Date:

also read

National Youth Day 2022 is a reminder to rededicate efforts to skilling, educating Indian youth
India

National Youth Day 2022 is a reminder to rededicate efforts to skilling, educating Indian youth

Now is time for the key stakeholders – the government, corporates, and the civil society – to work in greater synergy than ever and devise targeted interventions

'We have fastest-growing economy': Union minister hits back after Imran Khan's better than India remark
World

'We have fastest-growing economy': Union minister hits back after Imran Khan's better than India remark

Imran had on Tuesday said that despite 'unprecedented challenges', his government had to face during its three years in power, Pakistan's economic condition was still better than many countries of the region, particularly India

Pakistan refuses IMF's proposal to renegotiate loan fearing it might impose new conditions
World

Pakistan refuses IMF's proposal to renegotiate loan fearing it might impose new conditions

Pakistan and the IMF had signed a $6 billion deal in July 2019 but the programme was derailed in January 2021 and restored briefly in March, 2021 before again going off the track in June, 2021.