Govt nod on bailout package to sugar mills before Christmas

NEW DELHI: Government is likely to take a final call before this Christmas on a bailout package for the sugar industry that includes Rs 7,200 crore of interest-free bank loans to pay dues to sugarcane growers, Food Minister K V Thomas said today.

He also expressed concern about the slump in domestic sugar prices that has not created cash flow and profitability issues for sugar mills but led to pendency of cane payments to growers.

Last week, the PM-constituted ministerial panel headed by Agriculture Minister Sharad Pawar recommended relief measures to address the cash crunch faced by sugar mills unable to pay higher cane prices this season. Mills are saddled with dues of Rs 3,400 crore to growers.

Addressing the 79th annual general meeting of Indian Sugar Mills Association (ISMA), Thomas said that very soon, the Food Department would be moving towards giving immediate relief to the industry as per the panel's recommendations.

Asked when the government would take final call on proposed relief measures, he said: "Most probably before Christmas...We are doing it fast."

"Our Department is preparing a note. Before taking (it) to the Cabinet, we will again discuss in the meeting of the informal group of ministries (GoM)," he told reporters on the sidelines of an ISMA event.

Thomas said that it has been decided that loans worth Rs 7,200 crore would be provided by banks to the sugar industry exclusively for payment of sugarcane to growers.

Banks will lend equivalent to the excise duty paid by mills in the last three years, while the entire interest of 12 per cent would be borne partly by the Government of India and the Sugar Development Fund, he said.

Mills would have to repay the loans in five years and can avail of a moratorium on repayment in the first two years, he added.

Besides interest free loans, the panel had also recommended recasting of loans taken by mills as per Reserve Bank of India norms, incentives to produce 4 million tonnes of raw sugar and setting up of buffer stock, besides doubling ethanol-blending in petrol to 10 per cent.