The Tamil Nadu government has urged the Union government to help bail out the ailing sugar industry in the state and sought measures such as restructuring of loans availed by private and cooperative mills from banks, NBFCs and SDF (sugar development fund).
In a letter to Union finance minister Nirmala Sitharaman, chief minister Edappadi K Palaniswami said banks and financial institutions may also be instructed to finalise the debt restructuring package soon.
The chief minister sought directions to banks/financial institutions not to take any harsh measures under the Insolvency and Bankruptcy Code or the SARFAESI Act or refer cases to the DRTs till steps are finalised to revive the sugar sector.
Highlighting the measures taken by the state government for farmers and mills, the chief minister said the Union government may also sanction an additional sugar release to mills in the state so as to improve their financial liquidity.
In his letter, Palaniswami said banks may be advised to release loans to farmers for cultivating sugarcane even if they had not repaid earlier loans. He claimed the non-repayment of loans by farmers was due to the non-payment of fair and remunerative price dues to them by sugar mills.
The chief minister also enlisted steps taken by the state government for the sector and said capacity utilisation of the sugar industry, on an average, is expected to be not less than 45-50% during season 2020-21, which would enable the mills to move on a positive trajectory.
Tamil Nadu has so far provided transitional production incentive at Rs 200 per tonne of cane, over and above FRP, amounting to Rs 134.53 crore to 144,882 farmers for cane crushed during season 2017-18. The state government has also announced Rs 200 crore as transitional production incentive at Rs 137.50 per tonne of cane, over and above FRP, for cane crushed during the season 2018-19.
The letter said the state government has also taken steps to improve the cane area under drip irrigation to about 34,000 hectares in the 2019-20 planting season.