UP extends Rs 4,000 crore soft loan window to sugar mills by 15 days

Yogi govt had announced the scheme last year to aid mills in settling cane arrears

In a major relief to private sugar mills, the Uttar Pradesh government has extended the Rs 4,000 crore soft loan package window by 15 days to allow more millers to make use of the state-sponsored scheme.

Last year, the state had announced the soft loan package to help private millers tide over their precarious payments situation after commercial banks had put the domestic sugar sector in the negative list owing to subdued market outlook brought about by glut and low retail prices. The government had made the budgetary allocation in its first supplementary budget of 2018-19.

The soft loan was to be provided only to mills whose payment ratio stood at more than 30 per cent during the previous crushing season 2017-18. It would be offered for a period of five years and attract interest payment of 5 per cent. However, defaulting mills would have to cough up interest payment at the rate of 12 per cent.

Although, the scheme was announced in October 2018, so far only about Rs 2,610 crore of the total allocated Rs 4,000 crore could be disbursed to the eligible private mills.

Now, chief minister Yogi Adityanath has directed officials for giving another opportunity to the millers, so as to speed up the payment process for the last crushing season.

Currently, about Rs 8,000 crore is pending on UP private mills, of which roughly Rs 1,000 crore pertains to the previous crushing season. Last year, 119 UP mills, including 94 private ones, had procured sugarcane worth Rs 35,400 crore from the farmers with the state sugar output standing at more than 12 million tonnes (MT), which was highest in India followed by Maharashtra.

A senior cane department official told Business Standard that several private millers had applied under the state soft loan scheme, however, their applications could not be processed within the stipulated timeframe owing to extended bank holidays and other procedural reasons.

However, it is expected that soft loan worth only about Rs 500 crore would be availed of even during the extended widow, which would raise the total benefit under the scheme to nearly Rs 3,100 crore, much below the targetted Rs 4,000 crore.

Under the scheme, the private sugar mills would be provided loans through nationalised, scheduled commercial banks and cooperative banks to settle their outstanding.

Meanwhile, the private millers have also demanded the state government to ensure speedy payment of their cogeneration arrears on UP Power Corporation Limited (UPPCL), so that the payment ratio could further rise. Yesterday, the government had facilitated payment of about Rs 100 crore to this end. These cogeneration power dues pertain to months June 2018 onwards, a sugar industry official said.

The ongoing crushing season 2018-19 is already midway with the current sugar output standing at about 6 MT.