Lok Sabha passed a bill that will enable the government to grant Rs 4,610 crore financial package and interest-free loans to the sugar mills.
NEW DELHI: Lok Sabha on Monday passed a bill that will enable the government to grant Rs 4,610 crore financial package and interest-free loans to the sugar mills facing difficulty in making payment to farmers.
The House gave its approval to the Sugar Development Fund (Amendment) Bill, 2008, which will also allow the government to raise cess of Rs 25 per quintal on sugar as against Rs 15 a quintal earlier.
"With the increase in cess, the sugar prices can go up by 9-10 paisa a kg though it will benefit farmers, consumers and sugar industry by stabilising sugar production over a period," Agricultural Minister Sharad Pawar said whilised with financial measures, with five per cent of the amount to
be provided for from the Union Budget while the remaining seven per cent would be paid off from the Sugar Development Fund.
The interest subvention of 7 per cent from the Fund on loans given by banks and financial institutions to sugar factories is estimated at Rs 3,818 crore and interest subvention for 7 per cent per annum for 4 years would be Rs 792 crore.
Earlier, moving the amendment bill, Pawar said these measures were necessitated due to sharp fall in sugar prices that was caused by an unprecedented production of 283 lakh tonnes in 2006-07.
He said sugar prices had fallen sharply this year after prices remaining high for two years which had encouraged farmers to increase area under sugarcane plantation.
The Centre and states had to press many sugar mills to extend the crushing season to enable farmers cut the crop for sowing next wheat crop.
Surplus sugar production led to substantial losses to the factories and they were finding it difficult to pay cane arrears to the farmers, who in turn were unable to go ahead with sowing for the next season.
However, the financial package, transport subsidy of Rs 1,350 to Rs 1,450 on sugar exports and setting up of buffer stocks are expected to improve the situation, he said.
"Even then, there are sugar stocks of 280-290 lakh tones in the country as against about 190 lakh tone demand.
"With the fall in area under sugarcane production this year, the sugar prices will go up in next two years that will benefit the farmers," Pawar said.
Moving a resolution against the Bill, Mohan Singh (SP), Suresh Prabhu (Shiv Sena) said rules of conduct and tradition have not been followed in bringing it.
Later, the resolution was withdrawn when Pawar assured that funds would be utilised only for paying farmers' dues though the mills like in Motihari in Bihar, which did not operate last year, will not get any benefits.
The resolution moved by Bachi Singh Rawat (BJP) against the bill was defeated by voice vote.
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