Subvented Loan Scheme For Sugar Industry To End This Season

The government has decided to not to extend the financial assistance to sugar undertakings through interest subvented loan beyond this current season.

According to official sources, it was only meant for payment of arrears for the current season 2013.In fact even if loan applications are pending with the banks, the disbursements have tapered off since payments of arrears are already through in many parts except for Uttar Pradesh mostly.

The sugar industry had demanded to extend the scheme beyond this current season and increase the amount of loan by linking to last two sugar seasons and not three which is the current norm.

In December 2013, the centre had doled out Rs 6600 crore to the sugar industry to enable it to pay cane arrears to farmers. The loans were subsidized up to 12% interest subvention which worked out to around Rs 2750 crore to be met from the Sugar Development Fund under the Food Ministry.

As per official data, the sugar industry has paid Rs 47,852 crore to cane farmers till July 31 of the current marketing year ending September. The outstanding amount of sugarcane farmers of the country on sugar mills is Rs 9,252 crore which is about 16.20% of total amount payable during the current sugar season 2013-14.

Out of Rs 9,252 crore arrears, Uttar Pradesh millers owe maximum to cane farmers at Rs 5,741.74 crore followed by Karnataka mills at Rs 1,794.68 crore and Tamil Nadu mills at Rs 504.40 crore.

The Sugarcane (Control) Order, 1966 stipulates payment of cane price within 14 days of supply, failing which interest at the rate of 15% per annum on amount due for the delayed period is payable. The powers for enforcing this provision lie with the States/UTs.

In order to ensure payment of arrears, states have even resorted to coercive measures under essential commodities Act. In Uttar Pradesh, various districts appointed controller in private sugar mills for monitoring the stock of manufactured sugar and payment of cane arrears on regular basis.

The production of sugar in the country during last three sugar seasons as well as estimated production during current sugar season 2013-14 has been more than the domestic demand/consumption.

India's sugar production is estimated to rise by 4% to 25.3 million tonnes during 2014-15 marketing year starting October, despite a drop in cane area by 2%, according to industry estimates.

Sugar production of India, the world's second largest producer, is estimated at 24.3 million tonnes in the 2013-14 marketing year.

The annual demand is about 24 million tonnes. Keeping in view the estimated availability and demand/consumption of sugar, prices of sugar in the domestic as well as international market, the Government allowed export under Open General Licence (OGL).Thereafter, export of sugar is free subject to prior registration of quantity with the Directorate General of Foreign Trade (DGFT).

Source : business-standard.com