Govt comes to sugar units' rescue

INTERIM BUDGET & THE ECONOMY/AGRICULTURE

Finance Minister Jaswant Singh sought to pep up the spirits of the liquidity-starved sugar industry by announcing that the government would prepare a revitalisation package in consultation with the industry and other stakeholders.

Singh also said the banks and other lending agencies would examine restructuring of loans taken by sugar factories to provide them a temporary relief.

This would be done in consultation with the Reserve Bank of India (RBI) and the National Bank for Agriculture and Rural Development (Nabard), he said in his Budget speech.

He said this major agro-processing industry, which generated substantial jobs, was facing a complex web of problems.

The announcement has evo-ked mixed reaction. While the cooperative sector sugar mills have welcomed it, the private sector units felt that it was old wine in new bottle.

"Similar announcement was made in the last Budget but nothing concrete was done," said SL Jain, director-general of the Indian Sugar Mills Association (ISMA). "We have had a bad experience in the past. So we do not expect much from this announcement", he added.

National Federation of Cooperative Sugar Factories chief Vinay Kumar, on the other hand, reacted positively.

"Though we do not know what shape the final bail-out package will take, the fact that the government is willing to do something is praiseworthy," he said.

Both Jain and Kumar said the industry had given several suggestions to the government, including cut in the excise duty and creation of additional 1 million tonne sugar buffer, to improve the economic health of the industry.

On the restructuring of loans, Kumar said he would wait for the details to assess its impact. "Any relief will be welcomed", he added. Jain said this would help only cooperative mills and cooperative banks lending to that sector.