New Delhi, June 10
The Union Cabinet today approved an interest-free loan of Rs 6,000 crore to enable sugar mills pay arrears to farmers.
The Cabinet at its meeting chaired by Prime Minister Narendra Modi also gave clearance for the continuation of urea production from three plants that use naphtha as feedstock till availability of gas through pipelines or any other means, Ministry of Shipping's proposal for India to join the Bunker Convention to ensure compensation for damages caused by spills of oil when carried as fuel in ship bunker and bringing an ordinance to amend the Negotiable Instruments Act, which provides for filing of cheque-bounce cases in place where the cheque was issued.
The Cabinet’s decision to provide interest-free loan to the sugar mills would go a long way in helping the farmers, who have been waiting to get their arrears.
Sugar companies had earlier sought government’s intervention, saying they were struggling to pay huge cane arrears estimated at over Rs 21,000 crore.
Interest will not be charged from this loan for a year, and the interest will be borne by the government from sugar development fund. The money will go directly to farmers through their Jan Dhan accounts, Transport Minister Nitin Gadkari said after the Cabinet meeting.
The Cabinet also approved hike in the prices of ethanol.
Earlier, the sugar companies had said they were struggling to export more as global prices had dropped to the lowest since 2009.
The Centre had recently announced hike in sugar import duty to 40% from 25%.
The Indian Sugar Mills Association (ISMA) had earlier said the closing stock of sugar at the end of the current marketing year was estimated at around 10.3 MT, the highest in the past sugar seasons.
Abinash Verma, Director-General, Indian Sugar Mills Association (ISMA) said, “Rs 6,000 crore of loan by the government for the sugar industry, with a one-year moratorium, will not address the problem of surplus sugar and depressed sugar prices. The decision of the government to bear the interest on the loan for just one year as compared to five years in the previous scheme announced in February 2014, is actually not an interest-free loan in the true sense”.
To ensure smooth supply of urea in southern states, the government also approved continuation of urea production from three plants that use naphtha as feedstock till availability of gas through pipelines or any other means.
The Cabinet also decided to bring in an ordinance to amend the Negotiable Instruments Act, which provides for filing of cheque bounce cases in place where the cheque was issued, a move that will benefit 18 lakh people.