Nabard gives sugar industry a breather

The National Bank for Agricultural and Rural Development (Nabard) has decided to extend the moratorium period for recovering loans taken by sugar cooperatives and private mills by another three years to March 2010.

The decision to this effect was taken at the meeting of sugar mill chairmen and managing directors called by Nabard's chairman Y S P Thorat. The meeting was attended by union agriculture, civil supplies and food minister Sharad Pawar and couple of cabinet ministers from the Maharashtra government.

Speaking with Business Standard, managing director of the Maharashtra State Sugar Cooperative Factories Association Limited (MSSCFAL) Prakash Naiknavare said, "Currently, the sugar industry in the state is facing a bumper crop and falling prices of sugarcane in the international market. In such a situation, the industry is not in a position to repay the loans, which was to begin from April this year. This gives the much-needed breathing period for the sugar industry in the state."

It may be recalled that Nabard in 2005 had announced a package of Rs 1750 crore to rescue the state's ailing sugar industry, which was facing sugarcane shortage due to droughts for three consecutive years.

Under the package, loans of the sugar cooperatives and private mills were rescheduled for 5 to 15 years with interest rate being restricted to 10 per cent. Besides this, a moratorium on the recovery of the loans was announced up till March 2007.

Nabard has principally agreed to extend their package to 38 sugar cooperatives, which were not eligible in 2005, and 17 others that had opted out of the package previously, Naiknavare said.

Today's meeting also decided to form a five-member committee, headed by Vasantdada Sugar Institute (VSI), to suggest ways and means for making this package applicable to these sugar cooperatives. The committee will submit its report in two weeks.

Besides, the sugar industry has also asked the bank to reconsider its norms on harvesting and transporting costs of sugarcane, which, at present, has a cap of Rs 150 per tonne and a conversion ceiling of Rs 2,250 per tonne. The bank has agreed to refer these demands to the five-member committee, Naiknavare added.