Nationalist Congress Party (NCP) chief and former union agriculture minister Sharad Pawar has sought Prime Minister Narendra Modi’s intervention to bail out the sugar industry from the crisis aggravated exponentially by the nationwide lockdown. He has urged the centre to provide funds for clearing export incentives and buffer stock expenses pending since 2018-19 and 2019-20, increase the MSP for sugar ranging from Rs 3,450 to Rs 3,750 with grade-wise increment, and provide a one time grant of Rs 650 per tonne on the average cane crushed during the last two years.
Pawar further demanded the conversion of outstanding working capital into short term loan and rescheduling all the term loans for 10 years with a moratorium of two years on the lines of the Mitra Committee recommendations. He argued that distilleries run by sugar mills need to be treated as Strategic Business Units. On a standalone basis, the banks should finance the Ethanol projects sanctioned under the Interest Subvention Capex Scheme announced by the central government in 2018.
“Hoping that you would look into the matter and initiate necessary relief measures to resolve the crisis worsened due to the coronavirus pandemic,’’ said Pawar, in his letter addressed to the PM.
Pawar’s plea comes at a time when the COVID-19 pandemic has increased the stress on working the capital liquidity of sugar mills, resulting in compounding of cane arrears of the sugarcane growers. The industry wants the centre to urgently settle and pay all the financial incentives of the mills on buffer stock, sugar export and soft loan pertaining to sugar season 2018-29 and 2019-20
National Cooperative Sugar Federation MD Prakash Naiknavare told the Free Press Journal, “To expedite the process of the timely settlement of claims of eligible sugar mills, there is urgent need to increase the budgetary allocation of funds to the Ministry of Food. There is a shortfall of Rs 7,910 crore in comparison to the actual expected claims of the eligible sugar mills. If the Finance Ministry provides budgetary funds immediately, then the Ministry of Food will be able to clear and settle the claims of eligible sugar mills under various schemes.’’ He said this will help improve the liquidity of sugar mills, which will help reduce the mounting cane price arrears of sugarcane growers.
Naiknavare explained that slowed down exports and steep drop in industrial sugar consumption have created an unprecedented acute liquidity crunch with no working capital and no loan security at the mill level. The new crushing season is merely four and half months away and the sugar industry needs liquid cash for meeting pre-seasonal maintenance expenses and releasing cane and salary arrears. In the absence of immediate funds, the new crushing season may get delayed.
