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Ministerial Panel recommended bailout package to Sugar Industry

Dec 7, 2013 11:11 IST

An informal Group of Ministers (GoM) headed by the Union Agriculture Minister, Sharad Pawar on 6 December 2013 recommended a bailout package to the Sugar Industry. The bailout includes 7200 crore rupees at 12 percent interest rate to sugar mills by the banks to pay off the arrears of the sugarcane growers.

The 12 percent interest on the financial support on the loan will be paid by Government of India (GoI) and Sugar Development Fund (SDF). The GoI will pay 5 percent of the loan, while the 7 percent will be paid by the SDF. This makes the loan amount free of interest for the sugar mills.

The ministerial panel was constituted by the Prime Minister. The panel has also recommended loan recasting for the mills as per the Reserve Bank norms, incentives for production for the raw sugar of up to 4 million tonnes and to set up the buffer stock besides doubling ethanol-blending in petrol to 10 percent. The government will set up an inter-departmental committee to implement the proposal of ethanol blending. Ethanol is derived by processing sugarcane.

The panel has ruled out an immediate hike in sugar import duty.

The sugar industry at present is facing a financial crisis due to higher cost of production and fall in the prices of sugar. This has led to 3400 crore rupees cane arrears from 2012-13 during the marketing year that ended in September 2013.

India is the second biggest sugar producer in the world after Brazil. Maharashtra and Uttar Pradesh are the top sugar producing state of India.

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