Govt. grants Rs 6,000 crores interest free loan to sugar mills

The central government has approved Rs 6,000-crore interest free loan to sugar mills to help them partly clear cane price arrears to farmers that have touched about Rs 21,000 crore.

The decision was taken in a meeting of the Cabinet Committee on Economic Affairs (CCEA) held in New Delhi, a PTI report said.

After the meet, Union Minister Nitin Gadkari told reporters, "Mills have been unable to make payment to farmers because of high production and lower domestic prices. Cane arrears have reached Rs 21,000 crore."

"The government has sanctioned interest-free loan of Rs 6,000 crore for farmers. Sugar mills will prepare the list of farmers. And on the basis of that, the amount will be directly transferred by banks into the Jan Dhan accounts of farmers," he said.

The Centre will bear the interest burden of Rs 600 crore from the Sugar Development Fund (SDF), he said, adding that the arrears outstanding till June will be cleared.

"The CCEA has provided a 1-year moratorium on this loan, and will bear the interest subvention cost to the extent of Rs 600 crore for the said period," as per an official statement.

The CCEA also decided that the loans would be provided to those units which clear at least 50% of their outstanding arrears before June 30, 2015.

This is the second time that the Modi government is providing interest-free loan to cash-starved mills. In December 2013, the UPA government had given interest-free loans of Rs 6,600 crore to make payments to cane farmers.
(Image: Indiatimes)