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Loan prop for sugar

Thomas: Sop time

New Delhi, Dec. 18: The government is planning to provide financial incentives, including an interest-free loan of Rs 7,200 crore, to sugar mills for making payment to cane farmers.

The move is aimed at boosting production.

“The proposal on giving a financial package to the sugar industry will come up before the cabinet at the earliest,” food minister K.V. Thomas said after a meeting of an informal group of ministers (GoM) on sugar.

Sources said the proposal was likely to come up before the cabinet tomorrow itself.

Concerned that the non-payment of cane arrears will increase farmers’ woes, which might hurt the UPA’s prospects in next year’s Lok Sabha polls, the ministerial panel today met again to consider additional sops for millers.

“In the GoM, we discussed about other incentives, especially reducing the period for re-export of imported sugar from the existing 18 months. We heard views from the industry. No decision has been taken,” Thomas said.

The cabinet proposal is in line with relief measures recommended by a panel constituted by Prime Minister Manmohan Singh and headed by agriculture minister Sharad Pawar to address the cash crunch faced by mills and their inability to pay higher cane prices this season.

The mills have cane arrears of Rs 3,400 crore. The remaining amount will be utilised for this year’s payments.

According to the terms of the bailout package to the beleaguered industry, banks will provide a Rs 7,200-crore loan to mills at a 12 per cent interest rate with a condition that the money will be used to pay farmers.

 
 
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