In what may bring huge relief to the beleaguered sugar industry in Uttar Pradesh, the Lucknow bench of the Allahabad High Court has given sugar mills in the state almost a months’ time to clear their outstanding cane dues of approximately R2,500 crore.

As per the court’s decision, the principal secretary of the sugarcane department will have to give an affidavit on 17 September stating compliance with the court’s order dated 4 July, which directed the state government to ensure payment of sugarcane dues to farmers across the state within a month and a half. The court has now given mills time till October 2 to clear all dues and fixed October 3 as the date of next hearing.

This decision is expected to give great respite to the sugar mills, which are under immense pressure to clear the dues despite a damp domestic market and failure in getting financial aid from banks or the state government.

In fact, the court’s order comes after advocate general SP Gupta argued on behalf of the state government, and stated that the reason why the government was averse to taking more stringent action against the errant millers was that if force is applied in the form of issuing RCs and filing FIRs, the mills may refuse to operate in the next season, which may lead to a bigger problem of cane remaining uncrushed. In such a scenario, farmers will be forced to set their cane afire, which may lead to a bigger law-and-order problem.

Pleading for more time, the AG said the situation is bad as even the state government has not been able to clear its entire dues for the cogenerated power purchased from the mills. More than R650 crore in power dues is pending with the Uttar Pradesh Power Corporation.

“The bigger problem is that sugar mills have not yet filed their cane requirements for the next year, with the cane department asking that the government first declare its SAP for sugar. Due to political compulsions, the price of cane in UP is increased every year. As a result, cane prices are very high while sugar prices have come down drastically. So far, the industry has paid more than 88% of the entire cane price and about 12% is left. And out of this 12%, almost 6% has to be given by the government as cane dues while only 6% has to be given by the millers,” he said.

It may be mentioned that farmers burning their standing cane crop is not unheard of in the state. Farmers have resorted to this move in the past whenever mills didn’t lift the cane, leading to mass deterioration of law and order. The farmers are forced to do this as they want their fields to be evacuated, so that they can get it ready for the next crop on time.

Upon hearing the magnitude of the problem the mills are facing, the court thought it fit to grant the mills more time. Talking to FE, a sugar miller in the state said the industry is happy that the court has taken an extremely realistic view on the problem.