Centre reschedules sugar mill loans for 7-year repayment

PILIBHIT: In a decision aimed at easing the financial burden on 33 sugar mills operating across eight states, the Centre has restructured the repayment of their outstanding loans, extending the period to seven years. The decision, initiated by the National Federation of Cooperative Sugar Factories (NFCSF) in collaboration with the finance minister Nirmala Sitharaman seeks to alleviate the financial strain faced by sugar mills due to the accumulated loans and interests.

With a cumulative debt of Rs 1,378 crore, Maharashtra holds the largest share with Rs 861 crore, while Gujarat has the smallest outstanding amount of Rs 39 crore. Other states, including UP, Tamil Nadu, and Karnataka, have outstanding amounts of Rs 202 crore, Rs 113 crore, and Rs 103 crore respectively. The remaining amount is attributed to other states like Andhra Pradesh and Odisha.

Of the total outstanding loan, the principal amount stands at Rs 565 crore, with an additional Rs.192 crore in interest. The Centre has waived off the additional interest and rescheduled the payment of the principal and interest over seven years. The first two years will be interest-free, providing immediate relief to the sugar mills.

NFCSF officials recently met with top govt officials to address the challenges facing the sugar industry, particularly the financial crisis resulting from ethanol production restrictions. Govt froze the minimum selling price of sugar at Rs 31 per kg in Feb 2019, while the price of sugarcane has been increasing annually. NFCSF urged govt to adjust the sugar price to match the rising cane prices and to consider launching a "sugar reserve stock scheme" to stabilise the industry.

The officials acknowledged the need for a sugar price adjustment and suggested linking the price to cane prices under the Centre’s sugar price control order. They also agreed to explore the possibility of a sugar reserve stock scheme to help the sugar industry overcome its current challenges.