The Cabinet Committee on Economic Affairs (CCEA)
approved interest-free loan for the ailing sugar industry to pay off cane
arrears.
A loan of around Rs
6,000-7,000 crore would be extended to the sugar
industry from the Sugar Development Fund
The interest amount would be paid by the Centre.
This bailout package has been announced to rescue
the farmers and liquidate cane arrears.
Due to high state-advised cane prices and falling sugar
prices, mills are unable to pay the cane farmers.
The informal group of ministers, headed by
agriculture minister Sharad Pawar,
had suggested in their proposal that the loan should strictly be used to pay
cane farmers.
Earlier this week, Pawar
said: "this proposal will go in two phases -- one this week and the final
next week."
Hailing the decision, the sugar industry hoped
clearing the past cane arrears through this loan. "It's a wonderful
gesture by the Union government for farmers and the industry at the same time.
The loans will ensure timely payment to farmers to that extent at least,
including the clearance of past cane arrears of Rs. 3,000
crore," said Abinash Verma, director general, Indian Sugar Mills Association
(ISMA).
He also said the loan would help the industry
reduce the interest burden by around Rs500 crore
annually in the next five years.
Prime minister Manmohan Singh had appointed an informal group of ministers
in November this year to look in to the issues of sugarcane farmers and sugar
industry. Finance minister P Chidambaram, civil aviation minister Ajit Singh, petroleum minister Veerappa
Moily and food minister KV Thomas are a part of the
PM-appointed panel.
Other key measures, which have been proposed by the
PMappointed committee of ministers, are incentives to
produce 4 million tonne of raw sugar and setting up of buffer stock, besides
doubling ethanol blending in petrol to 10 per cent from the current 5 per cent.