Sugar package may turn bitter

Finmin rejects proposal to extend package to mill owners

Having failed to persuade the state governments to avail of the financial package meant for sugarcane growers, the Union government appears to be under political pressure to extend the package to sugar mill owners.

With the Lok Sabha elections round the corner, the Bharatiya Janata Party (BJP) is finding itself on a sticky wicket in Uttar Pradesh and Maharashtra""the two states where the sugar politics bears significant influence on the state politics.

In fact, the finance ministry has cleared a Rs 640 crore package for sugarcane growers. Under the package, the Centre has offered loans to states to repay the mounting dues of farmers.

That none of the states accepted the package indicates reluctance on the part of the state governments to persuade sugar mill owners to pay farmers' accumulated dues, which adds up to Rs 2,000 crore all over the country.

Realising that the issue may snowball into a serious political controversy on the eve of elections, UP Chief Minister Mulayam Singh Yadav called on Union Agriculture Minister Rajnath Singh and pleaded his case for offering grant to states to pay off farmers' dues.

What appears to have worried the BJP and Yadav is the huge crowds Congress chief Sonia Gandhi attracted during her recent visit to western UP, the sugarcane belt.

Though Yadav's demand is unacceptable to the Centre, there is a pressure from the BJP to revise the package to offer direct assistance to sugar mill owners.

If the Centre could offer soft loans to mill owners, a part of the farmers' dues could be paid, officials in the agriculture ministry said.

Though the package may yield good political dividends for the BJP, the finance ministry appears to have expressed reservation in accepting such a package as it will amount to giving soft loans to "defaulter" sugar mill owners, who have not paid farmers' dues for years on end.

"This will prove not only bad economics, but also bad politics," officials said.

Another suggestion by the BJP farmers' cell was that funds be doled out directly to farmers by the Centre. However, the suggestion was turned down on the ground of being "impractical" in view of the constitutional constraints imposed on the Centre.

"Such a demand, if accepted, will open a Pandora's box as the Centre will be asked for compensation for even failure of crops," said sources in the BJP.

The sugar mill owners have not taken kindly to the central government's decision to hike the statutory minimum price for sugarcane to Rs 73 per quintal.

The non-payment of dues to farmers by sugar mills, despite the hike in the statutory minimum price, may trigger political discontent among farmers before the polls unless the Centre comes out with a viable package.

By all indications, the Union government appears to be caught in a cleft stick on the issue, which have the political potential to make or mar the BJP's electoral prospects in the country's two largest state in terms of Lok Sabha seats.