The cabinet on Wednesday approved Rs.6,000 crore interest free loan to sugar mills to make payments to sugarcane farmers, Road Transport and Highways Minister Nitin Gadkari said.
"We have taken this decision in the interest of farmers," Gadkari told the media after a cabinet meeting.
Asked about the government's long term plans for the sugar industry, he said: "For long term, the government is in discussion."
The major sugar producing states are Uttar Pradesh, Maharashtra, Karnataka, Tamil Nadu, Andhra Pradesh, Telangana, Bihar, Gujarat, Haryana, Uttarakhand and Punjab.
The stocks of sugar companies rose following the cabinet approval.
The stocks of Balrampur Chini were up 5.49 percent, Shree Renuka Sugars 11.17 percent, Dhampur Sugar 5.17 percent and Andhra Sugars 6.32 percent in the Bombay Stock Exchange.
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