The Centre’s decision to provide ₹10,540 crore as soft loans to sugar mills to help clear mounting arrears to cane farmers is being slammed as an election gimmick by both opposition politicians and farmer groups.
Earlier this week, the Union Cabinet approved a proposal whereby the government will bear interest subvention costs at 7-10%. Banks will directly pay the arrears into farmers’ bank accounts on behalf of the mills. This is the sixth major package to bail out the cash-starved sugar sector since May 2018. The move may help reduce the arrears which have now crossed ₹22,000 crore.
“This has clearly been announced with an eye on elections. Last year [in June 2018], the BJP lost the Kairana bypoll because of anger of sugarcane farmers. This time, they do not want to take any risks,” said Samajwadi Party spokesperson Sudhir Panwar, who was the SP candidate in 2017 for one of the Assembly seats falling within the Kairana Lok Sabha constituency, in the heart of Uttar Pradesh sugar country.
“This is also the result of blackmail by the sugar mills. Their tactic is to withhold payment, so the farmers will put pressure on the government,” he said, adding that measures to regulate and diversify the industry would prove a better long-term solution to the woes of the sugar sector.
V.M. Singh, convenor of Rashtriya Kisan Mazdoor Sangathan, which represents cane farmers, said the government should have directly paid the farmers without involving the mills. “The mills are defaulters in the eyes of the law; why is the government helping to bail them out? In U.P., there are still ₹1,300 crore arrears pending and mills have not even complied with court orders to pay the interest to the farmers,” he said. “Everyone understands that this is just an election jumla, but people in the villages will not be taken in.”
While Uttar Pradesh has the highest arrears, it is the second-largest producer of sugar in the country. Vijay Jawandia, a farmers leader from Maharashtra, the top sugar-producing State, said that such populist measures would not solve the problems of the sector. “Ten other major crops should be made remunerative, so that there is crop diversification away from sugar,” he said, pointing out that cane is also a water-guzzling crop which farmers grow only because profitability is guaranteed by the government.