The Cabinet has approved a scheme of interest-free loans worth Rs. 6,600 to sugar mills as a bailout package. This will help mills pay off accumulated dues to farmers.

The loans will be utilised to pay arrears to farmers to the tune of Rs. 3,000 crore, the Indian Sugar Mills Association said.
 

Crushing of cane by mills was delayed by a mosnth in November after millers refused to pay higher cane price, citing a financial crunch.

India is the world’s second largest sugar producer and the biggest consumer. Retail prices of the sweetener are a sensitive issue. An inter-ministerial panel had been set up by Prime Minister Manmohan Singh to recommend a bailout package for the sugar industry soon after a crisis over payment in Uttar Pradesh last month.

The food ministry had proposed that loans worth Rs. 6,600 crore would be provided by banks to sugar mills exclusively for sugarcane payment. Banks will lend equivalent to the excise duty paid by mills in the last three years.