Yogi's sweet pill for beleaguered UP sugar sector

UP govt calls for a meeting with owners of top defaulting mills on Wednesday, April 12, to this end

The incumbent Yogi Adityanath government in Uttar Pradesh is moving fast and deftly to sweeten farmers' stake in the state sugar sector, which touches the lives of almost four million farm households and supports direct economy worth almost Rs 35,000 crore annually.

In this backdrop, UP cane development and sugar industries minister Suresh Rana has convened a meeting of the owners of top defaulting mills on Wednesday (April 12), including Modi Group, Simbhaoli Sugars, Bajaj Hindusthan, Wave Group, Yadu, Uttam, Indian Potash, and Birla group.

Soon after taking oath of office, the Yogi dispensation had stressed its commitment towards farm and farmers, promising to take proactive steps to double the farm income in the next few years. The government has also promised to open new sugar mills going forward.

Sugarcane is the largest cash crop and currently UP is the country's largest sugar and sugarcane producer. It always figures as a major political topic, especially in western UP belts, during successive polls. The sector has been a political hot potato due to pending arrears, court cases, farmers' protests, demand of higher cane price, anomalies in sale of government mills, closure of mills etc.

On March 23, Yogi had asked state mills to settle arrears within a month, while reviewing the payments situation and warned of strict action against the defaulting units.

In its 2017 UP election manifesto, the now ruling Bharatiya Janata Party (BJP) had promised to ensure cane farmers' payments within the stipulated 14 days after purchase of cane at the factory gate.

As on date, total arrears to the tune of almost Rs 6,000 crore are pending on private mills with the deadline of April 23 less than two weeks away. Since, mills are provided a window under law to settle cane dues within two weeks' of the purchase, the payable dues are also to the tune of over Rs 4,000 crore.

Meanwhile, the sugarcane crushing season underway and is likely to continue until May. Already, 50 of the 116 operational mills, have closed down following conclusion of their crushing operations. All the state mills have collectively produced over 8 million tonnes (MT) of sugar this season compared to under 7 MT for full last season 2015-16.

Considering the current dispensation's adherence to its other promises, such as closure of illegal slaughterhouses, formation of anti-Romeo squads and curb on extravagance, Yogi is expected to act tough against mills if they falter in payments.

Besides, the Yogi regime has instituted an inquiry into the alleged loss to the tune of Rs 1,200-crore in the sale of 21 sugar mills during former UP CM Mayawati's regime (2007-12), on account of discrepancies in valuation of land and machinery.

In fact, the successive Akhilesh Yadav government (2012-17) had ordered a probe by the state Lokayukta in November 2012. However, no action was taken.

In 2007, the Mayawati government had decided to privatise 10 operational mills of UP State Sugar Corporation Limited (UPSSCL) and 11 defunct units of UP Rajya Chini Evam Ganna Vikas Nigam Ltd (UPRCEGVNL). The 21 mills were sold between July 2010 and March 2011.

In its report, Comptroller and Auditor General (CAG) had hinted at grave anomalies in the sale process, related to undervaluation of land and plant machinery and lack of competition. The prices received were far lower than expected in 14 of the 21 mills sold during the process.

Meanwhile, the Yogi government has even hinted at recommending a CBI probe to dig out the truth if such need arises.