The Rs 6000-crore Central package appears to be part of a two-pronged strategy of the government to provide financial support to sugar mills to pay cane arrears and bring policy changes aimed at helping the sugar industry saddled with debt.

The state government feels Maharashtra, the biggest cane producer in the country, stands to benefit from the measure to provide interest-free loans. Sugar mills in the state, which are finding it difficult to pay fair and remunerative price (FRP) owing to plummeting sugar prices, feel the step is not enough to tide over the crisis.

Chief Minister Devendra Fadnavis said that the decision to ease norms for export of sugar and increase excise duty on import of sugar had given a much needed breather to the sector. The Centre’s package comes as an added incentive to enable sugar mills to adhere to the central guidelines to pay Rs 2200 per tonne to sugarcane farmers. He said the state would be a major beneficiary of the Centre’s decision to provide interest-free loans.

The government, he said, had been pursuing the case of the sugar industry but at the same time it has to adopt a practical approach and cannot exempt sugar mill owners from not paying FRP to farmers, he said. Maharashtra Cooperative Sugar Mill Owners Federation led by senior NCP leader Vijaysinh Mohite Patil had met minister for cooperation Chandrakant Patil seeking a financial package for sugar mills. Majority of the Congress and NCP leaders who run sugar mills sought financial subsidies from both the central and and state governments. According to the federation, the state government should ensure Rs 850 per tonne subsidies if the Rs 2200 per tonne FRP had to be paid to farmers. Without government subsidy it would be difficult to sustain sugar mills in the next season. Interest free loans is not enough, the federation said. However, cooperation minister (Chandrakant Patil) said that if the state were to concede to their demand, “we would be overburdened with Rs 3,500 to Rs 4,000 crore”. Moreover, he said sugar mills should take measures to run as a normal business raising funds from the open market. The Centre’s FRP mark has irked mill owners. The Congress-NCP leaders who constitute a majority when it comes to owning sugar mills expressed their inability to adhere to the FRP. According to former Speaker and senior NCP leader Dilip Walse -Patil, “The centre’s decision to provide Rs 6000 crore interest free loan is for the entire country which is not going to help in overcoming the crisis in Maharashtra.” According to him, the centre and state’s delayed response, coupled with some erroneous policies compounded the woes of cane growers and mill owners. He believes some policy decisions could have helped in overcoming the sharp decline in sugar prices in the domestic market. He said, “It should be seen as cane farmers problems and not dismissed an issue of mill owners alone.”