Govt. has sanctioned soft loan of Rs. 6000 crores to sugar mills to pay dues of sugar cane growing formers. The pending dues of farmers from sugar factories have reached alarming figure of Rs.21000 crores. The sugar factories could not pay these arears because of great difference in selling price of sugar and cost of production. While the cost comes to Rs.3200 per quintal, the selling price of mills is ranging between Rs.2200 to 2300 per quintal.
This amount of soft loan on which there would be no interest for first year would be provided to the cane growing farmers connected with sugar mills which have cleared not less than 50% dues of farmers. The sugar mills are expected to communicate details of farmers including their bank account numbers so that the amount could be credited directly to the bank accounts of concerned farmers. The concerned sugar mill will credit loan amount of govt. in its books and will have to bear interest burden in second year. Interest for the first year around Rs. 600 crores on loan amount of Rs.6000 would be born by government.
Hence, it would be a great relief to the sugar cane growing farmers who are waiting for their payment from sugar mills. However, farmers would be getting less than one third of their dues from sugar mills which went up to Rs. 21000 crores. The management of sugar mills are generally not happy with this proposal as they are not getting any relief to reduce their losses and other debt burden which is going to increase further on which interest amount to be borne by them after one year would be substantial and add to there losses.
Author:
B.K. Jain
Dean, MBA
