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The crisis over payment of sugarcane arrears to farmers in Karnataka is likely to end, albeit temporarily, as both sugar mills and the state government have come to a solution. After a brainstorming discussion with the sugar mills on Saturday, the state government has agreed to come to the rescue of mills.
According to official sources, the government has agreed to pay Rs 100 a tonne as a one-time assistance to farmers provided sugar mills pay an equal amount before January 20. This means, the farmers will get Rs 200 out of Rs 400 a tonne cane arrears for the 2013-14 crushing season. For the remaining Rs 200 a tonne, the government has assured mills to discuss the issue post the conclusion of current year’s crushing.
With this, farmers would get about Rs 760 crore of the total arrears amounting to Rs 1,803 crore.
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“The chief minister had a meeting with representatives of sugar mills on Saturday evening. It was decided that the government will pay Rs 100 a tonne to farmers on behalf of sugar mills, provided they pay their share of Rs 100 a tonne before January 20. This is not a comprehensive solution to the problem. The government will take the next step depending on how mills adhere to the formula worked out,” Tushar Girinath, secretary, department of commerce and industries, told Business Standard.
He said the government will discuss with the sugar mills once again after March and work out modalities on how to go about paying the balance Rs 200 a tonne to farmers.
For the year 2013-14, the state government had fixed Rs 2,500 a tonne as the cane price which was 19 per cent higher than the fair and remunerative price (FRP) fixed by the Central government. It had also paid Rs 150 per tonne as the support price for farmers. However, sugar mills across the state had paid only an FRP of Rs 2,100 a tonne and defaulted on payment of remaining Rs 400 a tonne.
Sugar mills had moved the Karnataka High Court against the government order on fixing Rs 2,500 a tonne. Subsequently, the High Court upheld the government order and directed the mills to pay up the price. However, the mills had expressed their inability to pay in view of the falling price for sugar in the market. They had asked the government to provide them a financial assistance and bail them out.
Girinath said the government has agreed to pay Rs 100 a tonne for now. But, there is no clarity as to if it is a one-time grant to mills or a loan to them. “The clarity would emerge when the government meets sugar mills again after March. For now, it is a temporary solution,” he said.
Earlier, in November last year, Karnataka minister for sugar H S Mahadev Prasad had promised the sugar mills that the government would waive the purchase tax and value added tax for a period of two years, if the sugar mills agreed to pay arrears in two installments.
A SIGH OF RELIEF
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The govt has agreed to pay Rs 100 a tonne as a one-time assistance to farmers provided sugar mills pay an equal amount before January 20
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The farmers will get Rs 200 out of Rs 400 a tonne cane arrears for the 2013-14 crushing season
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Farmers would get about Rs 760 crore of the total arrears amounting to Rs 1,803 crore
