Sugar mills sweat over Rs 16,000 crore cane arrears

NEW DELHI: Sugar mills are struggling to pay cane arrears of about Rs 16,000 crore as sales have halved and global prices have fallen. The maximum dues are in Uttar Pradesh, followed by Karnataka. The mills in Maharashtra have paid 90% of their arrears.

The arrears this year are lower than last year’s Rs 21,000 crore. “Apart from that, mills also have to pay accumulated arrears of previous years, pegged Rs 850 crore,” said a senior food ministry official.

The industry has told the government that it needs help to improve liquidity.

“Currently, banks and financial institutions lend sugar mills money at a margin of 15% against sugar and 25% against ethanol. We want it to be at a uniform rate of 10%,” said Abinash Verma, director general of Indian Sugar Mills Association.

Mills have also asked the food ministry for clearance of buffer as well as export subsidies besides deferment of the 7% interest burden on Rs 7,500 crore soft loan, given to the industry last year, for at least another year.

Last year, the government said there would be a buffer stock of 4 million tonnes, giving away Rs 1,674 crore to sugar mills. It had also announced a subsidy of Rs 6,268 crore for export of six million tonne. In 2018-19, the government had announced a transport subsidy of Rs 1,375 crore for exporting 5 million tones of sugar.

ISMA told the government that the buffer stock and various subsidies for the past two years require around Rs 12,800 crore. “However, budgetary provisions of just Rs 4,600 crore has been made in the last two years budget taken together. The government should immediately provision the remaining Rs 8,200 crore,” ISMA said in a letter to the ministry.

Uttar Pradesh recently ordered that each farmer should be given one quintal sugar by mills against cane dues. This would help millers clear their stock besides helping farmers. However, farmer leaders are not happy with this decision. They want their dues in time as the sugarcane season is drawing to an end.

“Government is diverting attention of farmers by such gimmicks. We want our payment in time. Cane arrears are mounting every time. Millers get package from government to pay us but our condition remains the same,” said farmer leader Sudhir Panwar.

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