UP asks sugar mills to clear arrears by August

The Uttar Pradesh government has directed the sugar mills in the state to clear their outstanding arrears by August.

Asking them to submit a monthly schedule for payment of their cane dues by August, the government has decided not to give any subsidy to help the mills tide over the losses.

Sugar mills in the state purchased sugarcane worth Rs 11,000 crore during the 2006-07 (October-September) sugar season. Of this, payments of only Rs 9,000 crore has been made.

"About 60 per cent of the mills have submitted their month-wise payment schedule and rest are in the process of doing the same. The government is very serious about the cane price non-payment. If a mill fails to clear all its dues by August, coercive actions will be taken against it," State Sugarcane Commissioner Kamran Rizvi said. The commissioner added that the state government has not considered providing any subsidy to the mills.

Most of the sugar mills have arrears almost 20-30 per cent of their total cane price payable. All the mills have incurred huge losses as the cost of producing sugar has remained higher than the realisations. This was primarily due to an increase in the state advised price of sugarcane from Rs 115-120 to Rs 125-130 a quintal and a decline in sugar prices from Rs 2000 to Rs 1300 a quintal.

Early this month, the state government had scrapped the 2004 UP Sugar Industry Promotion Policy that was introduced by the previous government to attract investments from the sugar industry. A new policy will be announced only after mills clear all the arrears.

UP is the second largest sugar producing state in the country after Maharashtra and has produced about 8.5 million tonnes of sugar this season.