Soft loan of another Rs.6,000 crore to clear sugarcane arrears

With dues payable by sugar mills to cane farmers still at Rs.15,400 crore, the government on Wednesday approved a soft loan of another Rs.6,000 crore to be disbursed directly by banks to the growers.

The decision was taken at a cabinet meeting, presided over by Prime Minister Narendra Modi, during which it was also hoped that sugarcane farmers are paid their dues fast.

"Furthermore, in order to incentivise mills to clear their dues expeditiously, the government had earlier mandated that soft loans will be provided to only those units which have cleared at least 50 percent of their outstanding arrears by June 30," an official statement said.

"The government has provided one year moratorium on this loan, and will bear the interest subvention cost to the extent of Rs.600 crore for the said period," said the statement.

"To further liquidation of arrears and increase coverage of the soft loan scheme, the government has decided to extend the date of achieving eligibility under the soft loan scheme from June 30 to August 31."

The cabinet decided that sugar producers now must discharge 50 percent of cane dues payable by August 31 to become eligible for the new loan, so that the benefit of the decisions taken on Wednesday can be extended to a larger number of farmers by enabling more mills to avail the benefits of the scheme.

"It has also been decided that after clearing cane dues of farmers, subsequent balance, if any, will be credited into the mill accounts. This will benefit about 150 additional sugar mills which had proactively liquidated more than 90 percent of their cane dues payable," the statement said.