Yogi govt tells sugar mills to settle Rs 2,500-cr arrears with farmers

Unsettled arrears pile up despite end of crushing operations for the season this year

One of the major pre-poll promises of Uttar Pradesh’s ruling BJP government related to ensuring swift payments by the state’s sugar-making firms has shown little progress with the amount of pending cane arrears standing at Rs 2,500 crore in the region.

The Yogi Adityanath government has issued fresh warnings to mills that are yet to clear their dues in this respect. Unsettled arrears have been piling up despite the end of crushing operations for the season this year. More than two months have passed since operations came to a close with the sugar mills owing payments worth Rs 2,571 crore, as against a payable amount of Rs 25,386 crore.

So far, a total payment of Rs 22,815 crore has been made by the state’s sugar mills.  

Chief Minister Yogi Adityanath had, earlier, issued a stern warning against the non-payment of dues within the stipulated period. Sugar-making firms were told that defaulting firms would face penal action.

Of the total 116 mills in the state, 32 mills are yet to clear their settlement amount, said Sanjay Bhoosreddy, the state’s cane commissioner who has been reviewing the payments situation. A total of 15 private mills have clocked payment levels less than 75 per cent, he added.

Mills have been asked to settle the pending amount, failing which a recovery certificate (RC0 would be issued against them allowing the seizure of their unsold stock and other assets.

The private mills additionally owe Rs 40 crore and Rs 57 crore as arrears for the year 2014-15 and 2015-16 respectively. The mills are further supposed to pay a 15 per cent interest on arrears if they are unable to pay farmers within 14 days.

In May, the cane department had imposed a penalty of Rs 227 crore on mills over the non-payment of the settlement amount. This amount is likely to rise further since the mills have not paid any heed to such warnings so far.

On April 20, a delegation from the UP Sugar Mills Association (UPSMA) met CM Adityanath and submitted a memorandum urging for a viable cane pricing and revenue sharing formula in the state to insulate the sugar sector from cyclical fluctuations.

The industry had also put forth its long-pending demand of de-reservation of molasses, which is a byproduct of sugar, so that the mills’ profitability could increase and contribute to the speedy settlement of arrears.

In the recently concluded crushing season, UP had topped domestic sugar production by clocking a record output of 8.75 million tonnes (MT), as compared to 6.82 MT last year. The state, thus, clocked 40 per cent higher production.

At present, the state has 91 sugar-making firms that belong to the private sector, besides having 24 cooperative sector firms and a single operational mill managed by the UP State Sugar Corporation Limited (UPSSCL).