The Centre on Friday unveiled a package to help the cash-starved sugar mills, which includes a soft loan of Rs 7,200 crore to settle the amounts due to sugarcane farmers.
A panel of senior ministers, which considered the demands of the sugar mills, has also decided to ask the State Governments to provide interest subsidy to the sugar mills. It, however, was divided on the mills’ demand for setting up a buffer-stock.
Talking to reporters after the meeting, Agriculture Minister Sharad Pawar said banks will give Rs 7,200 crore loan at 12 per cent interest rate to the sugar mills. “Total interest subvention will be 12 per cent. Of that, 7 per cent will be paid from the Sugar Development Fund, while 5 per cent from the Government,” he said.
The panel consists of the Finance, Food , Petroleum and Civil Aviation ministers. It has decided to recommend incentives for the production of raw sugar.
“We have to go by the WTO norms in export and import of raw sugar. We will not be able to make any changes in the (sugar import) duty structure. But, we will provide a ‘propaganda incentive’ to a new product from raw sugar,” a Minister in the panel said.
Apart from the Union Ministers, Chief Ministers of Uttar Pradesh, Maharashtra and Karnataka were also present. Tamil Nadu was represented by the State Chief Secretary.
The panel was, however, divided on the demand by the mills to set up a buffer stock. In the meeting, some argued that it would be difficult for the Centre to verify the claims of private mills on the buffer-stock.
The Government, a source said, is cautious on this issue after the recent problems in the spot exchanges.
Ethanol blending The panel has recommended doubling of ethanol blending in petrol from the present 5 per cent to 10 per cent.
“There was a demand to increase ethanol-blending from 5 per cent to 10 per cent. That has been accepted by the group,” Pawar said.
Pawar added that mills will have to repay loans in five years, but they can make use of a moratorium on repayment in the first two years. He said the Cabinet will discuss the panel’s recommendations soon.
The Agriculture Minister said an inter-departmental committee would be set up to coordinate with oil marketing companies and sugar mills.
The panel has also urged the State Governments to constitute a committee to decide on fair and remunerative prices in a scientific manner. The sugar mills in Uttar Pradesh had been complaining about the high price set by the Uttar Pradesh Government.