In a move that will benefit sugar barons from the cooperatives sector, a cabinet sub-committee of the state government has recommended issuance of government guarantees for 28 sugar mills to avail pre-seasonal loans. In the process, the government may end up diluting its own norms regarding issues of state guarantees to mills.
Minister of State (cooperatives) Dr Vishwajeet Kadam told the media that the proposal will soon be brought before the state cabinet for final approval. A good start to monsoon this year and a satisfying spell last season has seen a bumper crop of cane this year. Kadam said the government’s move was aimed at “ensuring all the cane is crushed in time” for the benefit of farmers.
The move, which comes just ahead of the season, is also aimed at improving the liquidity of some cash-starved sugar mills.
The sugar industry lobby is well represented in the Maha Vikas Aghadi government, with 16 of its 43 ministers having direct links to cooperative or private sugar mills. The recommendation to stand guarantee for sugar cooperatives comes at a time when the state exchequer is facing a severe cash crunch. A prolonged lockdown has resulted in drying up of revenue, forcing the government to borrow even to meet the monthly wage bill.
Cooperative sugar mills in Maharashtra have so far availed government guarantees worth over Rs 1,400 crore. Citing poor recovery, the previous Devendra Fadnavis-led government had initially adopted a policy of not extending guarantees to sugar mills, mainly controlled by Congress and NCP politicos, citing the mounting debt and rising liabilities on the public exchequer.
After the Uddhav Thackeray-led government took over, the chief minister had also insisted that “all directors (of such units) would need to furnish personal guarantees to avail such loans” after the bureaucracy pointed out past defaults.
The state cooperatives department has, however, said the guarantee amount will be tagged to the current crushing season, and it would be binding on sugar mills to make payments towards the loan from proceeds of the season.
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