Govt working to resolve arrears issue: Rajnath Singh

Government is working on a solution to ensure that cash-starved mills make timely payments of over Rs 12,200 crore dues to farmers, Home Minister Rajnath Singh said today.

“Sugarcane farmers’ issue (cane arrears) is a serious issue. The government approved a Rs 6,000-crore soft loan to facilitate mills make payment to farmers, but it has not been much successful. We are discussing this issue and will find solution,” Singh said.

He was speaking at the 80th birth anniversary of Bharat Kisan Union founder, Mahendra Singh Tikait.

Minister of State for Agriculture Sanjeev Balyan said a few things have been done to improve the situation of sugarcane farmers in western Uttar Pradesh but still there is need to done lot.

Hinting that government needs to buy more agriculture commodities, Balyan said: "We declare MSP for 22 crops whereas we buy mainly two crops wheat and rice. Then crops sell below MSP...System started deteriorating when farmers were left to open market."

Cane arrears were still to the tune of Rs 12,248 crore at the end of the 2014-15 season (October-September) despite government measures, including a soft loan of Rs 6,000 crore, to improve mills' liquidity position, which has been affected due to lower sugar prices and high cane rates.

Since the soft loan of Rs 6,000 crore was approved in the middle of the season, mills applied to avail loans for only Rs 2,700 crore. However, banks have been able to disburse only Rs 800 crore till the September 30 deadline and the rest Rs 1,900 crore is still to be given.

Keeping the interest of farmers, the government has given 15 more days to banks for disbursing Rs 1,900 crore soft loans to sugar mills to help them clear cane arrears to farmers, a senior Food Ministry official had said last week.

As per the policy, banks were asked to disburse soft loan by September-end. Mills that cleared 50% of their outstanding dues to farmers by August 31 were eligible for the loan.

Other measures taken by the government to ensure that mills make payment of cane arrears include hike in import duty, export subsidy on raw sugar and raising ethanol blending with petrol to 10% among others.

Sugar production is estimated at record 28.3 million tonnes in 2014-15 marketing year (October-September), as against 24.3 million tonnes in the previous year, while the total annual demand is pegged at 24.5 million tonnes.