The Centre on Thursday announced an additional soft loan of Rs 12,900 crore for sugar mills to create ethanol capacity. In addition, a separate soft loan of Rs 2,600 crore will be provided to molasses-based standalone distilleries to augment capacity and set up new units.

 

A soft loan is a loan given at a subsidised interest rate. A decision in this regard was taken at the Cabinet Committee on Economic Affairs meeting, chaired by PM Narendra Modi.

 

Sugarcane dues have crossed Rs 20,000 crore until February of this marketing year (October-September). The issue is also important from the political point of view as farmers in areas such as western Uttar Pradesh protested against non-payment of dues and marched to the national capital last year, demanding solution to their grievance.

 

In June 2018, the government had announced a soft loan of Rs 4,400 crore and provided an interest subvention of Rs 1,332 crore to mills over a period of five years, including a moratorium period of one year to augment ethanol output. Ethanol doping in petrol will also help the country cut its oil imports.

So far, the food ministry has approved 114 applications for a loan amount of Rs 6,000 crore although applications received were for over Rs 13,400 crore worth of soft loans.

 

“To augment ethanol capacity, the government has approved additional funds. These additional funds will be in two categories — Rs 2,790 crore and Rs 565 crore,” finance minister Arun Jaitley told reporters after the cabinet meeting.