Maharashtra's poll pitch sweetened with Rs 1,898 cr loan for struggling sugar mills tied to NCP and BJP leaders

The National Cooperative Development Corporation (NCDC) has approved a working capital loan of Rs 1,898 crore to the Maharashtra government for the infusion into 13 struggling sugar mills in the state. Of these mills, five are associated with Ajit Pawar's NCP politicians, while the other five are linked to BJP leaders, reported The Times of India.

The loan, which comes ahead of the assembly elections, is based on a floating interest rate and comes with an eight-year term, including a two-year moratorium on principal repayment, but not on interest payments.

Tension between the Bharatiya Janata Party and its ally, the Nationalist Congress Party have spilled out in the open, with BJP leaders claiming that NCP was a liability for their party, ET reported earlier.


The NCDC is a statutory corporation operating under the Ministry of Cooperation, established in 2021 and headed by the Union Home Minister. Previously, similar loans were allocated to the ailing mills before the Lok Sabha elections.

The largest loan amounts of Rs 350 crore each have been allocated to Kisanveer Satara Co-operative Sugar Factory Ltd in Satara district, connected to an NCP politician, and Shree Tatyasaheb Kore Warana Cooperative Sugar Factory Ltd in Kolhapur district, which is linked to an associate of a BJP MLA, the report said.

The struggling sugar mills need these loans to cover working capital requirements primarily needed for maintenance, salaries, pensions, and dues to sugarcane farmers. Vijay Autade, a sugar industry expert, explained the purpose of the funding.

"The loan cannot be used for developing new infrastructure. It is to be used for paying salaries and carrying out maintenance work. Many sugar factories are facing challenges which need concentrated effort. Otherwise, the mills will face a revenue deficit and seek loans every time they fall into a crisis," Autade told ToI.

P G Medhe, another industry expert, pointed out the need to revise the minimum selling price of sugar and rates of ethanol to stabilize the finances of these mills.

"In the last five years, the remunerative price to sugarcane farmers has increased five times, from Rs 2,750 to Rs 3,450 per tonne, but the MSP of sugar has not been raised. The mills have been bearing losses of Rs 500 to Rs 600 per tonne, and therefore, remain in spiraling debt," stated Medhe.

The funds are critical to ensuring these mills can continue operation and meet their financial obligations. However, industry experts argue long-term solutions such as price adjustments are essential to prevent recurring financial crises among the mills.

Maharashtra Assembly elections

The Maharashtra Assembly elections are slated later this year and the Congress is expecting to do well and oust the BJP-NCP-Shiv Sena Mahayuti combine out of power.

The Congress, which had contested the Lok Sabha elections jointly with the Shiv Sena (UBT) and NCP (Sharad Pawar) under the Maha Vikas Aghadi (MVA) alliance, is buoyed with its performance where it won 13 seats out of 17 that it had contested as part of the tie-up.

Tension between BJP and NCP came out in the open, with BJP leaders claiming that NCP was a liability for their party.

"If you ask the cadre on the road ahead, they will say 'end the alliance with Ajit'... For several years we fought against them; we don't need them. Why do we need them? We don't want to elect him so that he becomes a guardian minister and orders us around," BJP Pune district vice-president Sudarshan Chaudhari has said. "We could have three of our own as ministers. Joining hands with Ajit means we don't want to return to power (after the Maharashtra assembly polls).

The tenure of the Maharashtra Assembly ends on November 26.