Loan to sugar industry will not address problem

Chennai, June 11 (IANS) The Rs.6,000-crore loan, with a one year moratorium, for the sugar industry announced by the central government on Wednesday will not address the sector’s basic problem, said a top official of Indian Sugar Mills Association (ISMA).

In a statement issued here ISMA president A. Vellayan said: “The Rs.6,000 crore loan announcement by the government for the sugar industry, with a one year moratorium, will not address the basic problem of surplus sugar and depressed sugar prices.”

The government’s decision to bear the interest on the loan for just one year as compared to five years in the previous scheme announced in February 2014, is actually not an interest-free loan in true sense, he added.

He said to expect the industry to repay the loan of Rs.6,000 crore after one year is actually expecting the industry to make profits of Rs.6,000 crore within a year’s time, which does not seem to be possible with a surplus of over 10 million tons and depressed sugar prices of around Rs.10 per kilo below the cost of production.

Instead of giving this loan to the industry, the loan can be extended to a buyer like Food Corporation of India and other agencies who can buy out 2.5 to 3 million tons of surplus sugar from the industry, Vellayan said.

“This way, both the objectives of clearing cane price of farmers as well as reducing the surplus sugar can be solved. Disbursement of the loan to the government agency will also be faster than giving to individual mills, which will ensure that the farmers get their payments faster,” he remarked.

According to Vellayan, the government should help reduce surplus sugar stocks held by mills and improve ex-mill sugar prices, to ensure that the sugar mills are able to start their crushing operations in the next sugar season from October 2015.


Leave a Reply

Please enter your comment!

The opinions, views, and thoughts expressed by the readers and those providing comments are theirs alone and do not reflect the opinions of or any employee thereof. is not responsible for the accuracy of any of the information supplied by the readers. Responsibility for the content of comments belongs to the commenter alone.  

We request the readers to refrain from posting defamatory, inflammatory comments and not indulge in personal attacks. However, it is obligatory on the part of to provide the IP address and other details of senders of such comments to the concerned authorities upon their request.

Hence we request all our readers to help us to delete comments that do not follow these guidelines by informing us at Lets work together to keep the comments clean and worthful, thereby make a difference in the community.

Please enter your name here