The promised package for the beleaguered sugar industry is threatening to unravel. The mills haven’t submitted any undertaking with the government to clear cane arrears even more than a month after the latter promised to offer them a conditional relief package, food and consumer affairs minister Ram Vilas Paswan said on Tuesday.
Cane arrears in the country hit R10,541 crore as of July 15, with Uttar Pradesh alone accounting for 64% of the dues, Paswan said at the Indian Express Group’s Idea Exchange programme.
“To help the mills clear all cane arrears so that farmers are not troubled, we decided last month to offer them additional subsidised loans, raise import duty on sugar to 40% from the current 15% and continue to provide a subsidy of R3,300 per tonne for raw sugar production, which was actually decided by the previous government. But we said all these decisions will be notified only after they give an undertaking saying all cane arrears would be cleared at the earliest. But such an undertaking hasn’t come yet,” the minister said.
The promised subsidised loan package amounts to roughly R4,400 crore, on top of a similar package of R6,600 crore announced in December last year.
The outstanding amount up to July 15 was about 18.5% of the total amount payable to cane farmers during the current sugar season that started on October 1 last year. However, mills and cooperatives paid as much as R46,427 crore until July 15.
Mills in Uttar Pradesh — where the state government has often been blamed for stoking the crisis by announcing hefty state advised prices for cane arbitrarily for political considerations — led the pack with cane arrears worth R6,737 crore, followed by Karnataka (R1,836.59 crore), Tamil Nadu (R638.33 crore) and Bihar (R425.62 crore), according to food ministry data. The total cane arrears were as high as R11,000 crore until end May, of which mills in Uttar Pradesh accounted for around R7,000 crore.
When asked, however, Indian Sugar Mills Association director general Abinash Verma said: “Mills in Uttar Pradesh were asked to give a letter on clearing the cane dues and how they will do so.
The UP Sugar Mills Association (UPSMA) gave letters twice for this purpose and four to five meetings have been held with the food secretary. Nothing more was asked from us.”
In December last year, the Cabinet Committee on Economic Affairs (CCEA) had approved subsidised loans worth R6,600 crore to bail out the sugar mills as returns from sugar sales failed to keep pace with the raw material costs, resulting in a piling up of cane arrears. Mills will have to repay the loans in five years, with a moratorium on repayment in the first two years. The interest burden, estimated at R2,750 crore over five years, would be borne by the Centre from the Sugar Development Fund.