Centre supports UP govt in stand-off with sugar mills

Tells owners no help unless farmer dues cleared; asks state to take coercive steps

The central government on Thursday directed mills in Uttar Pradesh (UP) to clear all sugar cane dues to farmers by September 30 before expecting any assistance.

It urged the Uttar Pradesh government for further action against mills to ensure dues were cleared on time.

"We had called a meeting between mills, UP government and others. The state said mills were reluctant to make the payment despite evidence the cost of production had risen and the State Advised Price (SAP) of Rs 280 a quintal was justified," Union Food Minister Ram Vilas Paswan said.

He said the Centre had told mills the assistance it had promised - raising the import duty to 40 per cent from 15 per cent and extension of the tenure of interest-free loans from three to five years - would be implemented after dues were cleared.

Mills in UP owe Rs 5,000 crore to farmers. These have been unable to pay reportedly due to high cane prices and falling returns.

Paswan said, "Mills had no answers to charges by the UP government that Rs 11 a quintal of the SAP of Rs 280 a quintal had been waived by way of concessions and mills had diverted bank loans of Rs 1,668 crore, meant to be used for payments to farmers, to other activities."

He said mills wanted a commitment from the Centre on incentives announced earlier. "We directed these (the mills) to first clear dues."

He said of Rs 5,000-crore dues, Rs 3,000 crore were from five companies. The largest was of Bajaj Hindusthan, one of India's biggest sugar companies.

Paswan said, "The action taken by the state government, which includes filing of First Information Reports (police cases), is too soft and stricter action should be taken if mills don't make any payment."

Earlier this month, mills in UP had decided to suspend operations during the next season starting October, saying these were unable to pay the higher SAP. The state government has raised the SAP to Rs 280 a quintal for 2014-15 from Rs 260 a quintal the previous year.