Centre pushing cane aid to reluctant states

The financial package, cleared by the Cabinet on August 23, was meant to help the sugar industry in the five states to clear the cane price arrears on the basis of the state advised prices (SAP) which were higher than the statutory minimum price (SMP) fixed by the Centre. The states are Uttar Pradesh, Uttaranchal, Bihar, Punjab and Haryana.

UP will be the largest beneficiary of the aid package as the state has been offered an assistance of Rs 490.21 crores. The shares of the other states are: Uttaranchal Rs 32.25 crores, Haryana Rs 84.73 crores, Punjab Rs 30.96 crores and Bihar Rs 39.91 crores. The money, to be drawn from the Central exchequer through supplementary demand for grants, is to be routed to the states through the agriculture ministry.

Though the agriculture secretary had written to the chief secretaries of all these states on September 8, seeking proposals for the utilisation of these funds, none of them has responded so far. This has forced the agriculture minister to take up the issue directly with the chief ministers concerned.

Singh has pointed out to them that the new cane crushing season is round the corner and it will be only appropriate to clear the price arrears pertaining to 2002-03 crushing season before that.

The package is a one-time measure to help the cane growers who have supplied their produce to the private mills which are reluctant to pay the SAP. The money is to be handed over to the states as a soft loan at a concessional interest rate of 4 per cent with an initial 3-year moratorium on repayment.

This assistance is subject to the condition that the state governments would not fix the SAP in future. They are also required to withdraw the special leave petitions filed in the Supreme Court challenging the Allahabad High Court verdict of 1997 that had declared the SAP as illegal.