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Government approves Rs 6,000-crore interest-free loan to the sugar industry

11 Jun 2015 Evaluate

The central government has approved a Rs 6,000-crore interest-free loan to the sugar industry to enable it to clear cane arrears to farmers that stand at Rs 21,000 crore. The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, also agreed to provide a one-year moratorium on loan repayment and decided to bear the cost of interest subvention, to the extent of Rs. 600 crore, for the period.

This is the second time that the Centre has given an interest-free loan to millers to clear arrears, after its December 2013 decision, when it gave an interest-free loan of Rs 6,600 crore. The CCEA has however decided this time that the loans be given to units that cleared at least 50 per cent of their arrears before June 30. Union Minister for Road Transport and Highways Nitin Gardkari has stated that Sugar mills will prepare a list of farmers whose dues they have to clear and banks will transfer the amount to the Jan Dhan accounts of cane growers.

Nitin Gadkari further stated that government had already taken several measures to support the sugar sector, including an increase in sugar import duty to 40 per cent, raising export subsidy on raw sugar and an increase in ethanol prices to promote its blending with petrol.

India is likely to start the 2015/16 marketing year starting October 1 with carry-forward stocks of 10.3 million tonnes, up 37 percent from the current year and the country is likely to produce 28.5 million tonnes of sugar in the current marketing year ending on September 30, nearly 4.5 million tonnes higher than local requirement.

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