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Government asks banks to expedite the release of soft loans to millers

05 Aug 2015 Evaluate

Government showing its seriousness to protect the interests of sugarcane farmers has asked banks to expedite the release of soft loans to millers to pay cane arrears. Recently, Prime Minister Narendra Modi has reviewed the progress with regard to the Rs 6,000 crore incentive package approved by the union government in June 2015 and emphasized that the farmers' interest be kept foremost at all times and issues related to sugar sector be monitored regularly.

Millers have already submitted applications for about Rs 1,400 crore to different banks but loan has been sanctioned only in a couple of cases. To ensure that farmers are paid their dues expeditiously, in the present scheme, banks have to obtain the list of farmers and their bank accounts from millers with details of the extent of cane dues to be paid. The amount released by banks is directly paid into the account of the farmers on behalf of the sugar mills.

In June, cabinet committee on economic affairs (CCEA) had approved the scheme to provide Rs 6,000 crore soft loans to the sugar industry. It had decided to provide one year moratorium on this loan and to bear Rs 600 crore interest subvention. The CCEA had set the precondition that the soft loan will be provided to only those units which clear at least 50% (of dues) before June. Millers had to get these certificates from the cane commissioners in states.

In the past few months, besides the soft loan of Rs 6,000 crore, the government has raised the import duty on sugar from 15 to 40 percent, increased the export subsidy to Rs 4,000 per tonne and raised the level of ethanol blending in petrol to 10 percent. The government also allowed the export of additional 2,095 tons of raw sugar to the US under the tariff rate quota, under which imports there attract a relatively lower customs duty.

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