Sugar mills get more time to apply for loan

| | Lucknow
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Sugar mills get more time to apply for loan

Thursday, 18 October 2018 | PNS | Lucknow

Uttar Pradesh government has given two more weeks' time to private sugar mills to apply for the state-sponsored bailout package in the form of soft loans totalling Rs 4,000 crore. 
The sugar mills were supposed to apply for the soft loan by October 15 while commercial banks were mandated to process and clear the loan proposals by October 31. 
However, owing to cumbersome paperwork and formalities and the festival season holidays falling in between, the government acceded to the request of the sugar mills and banks to extend the application window.
UP Cane Commissioner Sanjay Bhoosreddy said the date for applying for the soft loan had been extended by another two weeks, to October 31. 
The banks are required to process the proposals and release the soft loan component by November 10. This amount will be extended to the sugar mills through their banks, which will directly transfer the amount of cane arrears to be paid to farmers in their bank accounts through RTGS and NEFT.
For the payment of arrears, the state government, in the supplementary budget for 2018-19 passed by Vidhan Bhawan in August, had created a corpus of Rs 4,000 crore to be offered as a soft loan to the sugar industry. 
The sugar industry is reeling under the twin burdens of huge unsold stocks and sugarcane arrears of almost Rs 8,000 crore.  
The soft loan would be offered only to those private mills whose payment ratio stands higher than 30 per cent for the previous crushing season. The loan would be offered for a period of five years on five per cent interest. The defaulters will have to cough up interest at the rate of 12 per cent.
Of the total 119 mills in the state, 63 mills have achieved a 'good payment' ratio of 73-80 per cent, 42 have clocked a payment ratio of over 50 per cent, while nine have a payment ratio of less than 50 per cent. UP has 94 private mills.
At present, a little over Rs 8,000 crore is to be paid by UP sugar mills to cane farmers and out of this amount, private millers owe almost Rs 7,900 crore, and the 24 Cooperative units account for the remaining portion.
In September, Chief Minister Yogi Adityanath had set the deadline of November 30 for private sugar mills to settle their cane dues. At that time, the consolidated arrears stood at about Rs 9,500 crore, of which the 94 private mills accounted for over Rs 8,600 crore from the 2017-18 crushing season. During the 2017-18 season, UP mills had recorded net dues of over Rs 35,400 crore.
In the recent supplementary budget, the state government had allocated a total of Rs 5,500 crore, including the soft loan component of Rs 4,000 crore, to bail out the sugar sector from the payments crisis, which threatened to impede the 2018-19 crushing season.
The next crushing season is likely to start around the first week of November. It may be pointed out that the area under sugarcane cultivation in UP has increased. The sugar glut has kept prices low over the past several months and the domestic sugar sector is passing through challenging times owing to crash in international sugar prices.

 

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