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Centre approves modalities for financial aid of Rs 6,600 crore to sugar industry

27 Dec 2013 Evaluate

Close on the heels of an 'in principle’ nod by the Cabinet Committee on Economic Affairs (CCEA), the government approved modalities for the beleaguered sugar industry to avail interest-free loans to the tune of Rs 6,600 crore from banks for effecting timely payment to cane growers.

In a meeting held on Thursday, CCEA accorded final nod for interest subvention of up to 12% for the industry under the 'Scheme for Extending Financial Assistance to Sugar Undertakings, 2013’.

As decided earlier, the entire interest burden on the loan, estimated at Rs 2,750 crore, will be met from the Sugar Development Fund under the Food Ministry. The ministry will also finalise the guidelines for banks and millers. Further, the loan which will be equivalent to last three sugar sessions’ excise duty, cess and surcharge on sugar, would need to be repaid in five years, with moratorium on repayment for the first two years.

Further, it decided that these loans will be disbursed through a separate bank account to ensure the utilisation of money is monitored and that the sugar undertakings with loans classified as 'Non Performing Assets’ by banks, will also be eligible for the loans, provided the concerned state governments give guarantee for their new loans. As per the norms approved by the CCEA, the loans shall be provided by banks 'exclusively' for making payments to sugarcane farmers, including arrears.

In yet another positive development, Food Minister KV Thomas underscored that Ministry would take up the issue of recasting of loans taken by mills, sops for producing 4 million tonnes of raw sugar and other proposals to help the sugar sector, with the cabinet by next Thursday.

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