Hefty interest subvention of 12% for sugar millers
Updated: Dec 26, 2013 04:57:12pm
New Delhi, Dec 26 (KNN) Government today gave its approval for the guidelines to provide a hefty interest subvention of 12 per cent to the crisis ridden sugar industry for payment of cane price arrears to farmers.
The sugar industry, particularly in Uttar Pradesh, has been under acute crisis due to logjam between millers and sugarcane growers. The main cause of the crisis is the higher state-mandated price that mills have to pay farmers. At the other end, the retail price has not been increasing much due to oversupply.
The Cabinet Committee on Economic Affairs (CCEA) gave its final approval to the proposal to provide interest subvention for financial assistance to the sugar industry for effecting cane price payments as per guidelines of the "Scheme for Extending Financial Assistance to Sugar Undertakings, 2013", according to an official statement.
This virtually amounts to giving interest free loans to the mills exceeding Rs 6,600 crores.
The financial assistance will be met fully from the sugar development fund (SDF).
The Centre will provide an interest subvention up to 12 per cent— at a simple rate of interest — for the additional working capital loans to the sugar undertakings.
The additional working capital loans to be provided by banks will be equivalent to last three sugar seasons excise duty, cess and surcharge on sugar (including notional equivalence for exports or availed Cenvat).
Sugar undertakings with loans classified as non-performing assets (NPA) by banks will also be eligible for the loans as long as the state governments concerned give guarantee for their new loans.
The interest subvention would be for total loan duration of five years, including two years moratorium period. No interest subvention will be provided for the period of default in the principal repayments.
The loans would be meant exclusively for effecting cane price payments by the sugar mills, according to the CCEA statement.
India is the biggest consumer of sugar in the world and its second-biggest producer after Brazil. Losses amounted to Rs 3,000 crore in the year ended March 2013.
India’s sugar production in 2013-14 is estimated at 24.4 million tonnes, while demand is estimated at 23.5 million tonnes. (KNN/SD)
The sugar industry, particularly in Uttar Pradesh, has been under acute crisis due to logjam between millers and sugarcane growers. The main cause of the crisis is the higher state-mandated price that mills have to pay farmers. At the other end, the retail price has not been increasing much due to oversupply.
The Cabinet Committee on Economic Affairs (CCEA) gave its final approval to the proposal to provide interest subvention for financial assistance to the sugar industry for effecting cane price payments as per guidelines of the "Scheme for Extending Financial Assistance to Sugar Undertakings, 2013", according to an official statement.
This virtually amounts to giving interest free loans to the mills exceeding Rs 6,600 crores.
The financial assistance will be met fully from the sugar development fund (SDF).
The Centre will provide an interest subvention up to 12 per cent— at a simple rate of interest — for the additional working capital loans to the sugar undertakings.
The additional working capital loans to be provided by banks will be equivalent to last three sugar seasons excise duty, cess and surcharge on sugar (including notional equivalence for exports or availed Cenvat).
Sugar undertakings with loans classified as non-performing assets (NPA) by banks will also be eligible for the loans as long as the state governments concerned give guarantee for their new loans.
The interest subvention would be for total loan duration of five years, including two years moratorium period. No interest subvention will be provided for the period of default in the principal repayments.
The loans would be meant exclusively for effecting cane price payments by the sugar mills, according to the CCEA statement.
India is the biggest consumer of sugar in the world and its second-biggest producer after Brazil. Losses amounted to Rs 3,000 crore in the year ended March 2013.
India’s sugar production in 2013-14 is estimated at 24.4 million tonnes, while demand is estimated at 23.5 million tonnes. (KNN/SD)
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