Maharashtra extends bank guarantees to co-op sugar mills

The state government had instructed the sugar commissioner to examine each proposal and fix the guarantee amount to be extended to the mills. Based on the availability of cane and the combined crushing capacity of the mills, the commissioner had made a proposal to extend bank guarantee to only four mills for an amount of Rs 90 crore.

Subsequently, a committee headed by Deputy Chief Minister Ajit Pawar reviewed the proposals and came up with a fresh one,which was cleared by the state cabinet recently.

The proposal, a copy of which is with The Indian Express, shows that the total amount of bank guarantee sanctioned for the mills has worked out to be Rs 371.57 crore. Of the 38 proposals for bank guarantees, eight were rejected as these mills were already facing action from banks under the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002.

Of the 30 mills that made it to the final list, 12 are managed by BJP leaders, nine by NCP leaders, four by Congress leaders and three by Shiv Sena leaders. Two mills are managed by a mixed body with leaders of various parties. The remaining two mills are managed by a body with no known political affiliations.

But it’s the NCP-led mills which have managed to get state guarantees for the maximum amount — Rs 152.97 crore for nine mills – much higher than the 138.43 crore for the 12 mills managed by BJP leaders.

Mills managed by Shiv Sena and Congress leaders received Rs 26.81 crore and Rs 33.09 crore, respectively, in way of bank guarantees.

It is no secret that ruling parties in Maharashtra – a state where political leaders have heavy stakes in the sugar sector — have used government largesse to sugar mills for leverage. While the NCP-Congress government had extended similar guarantees to mills during its 15-year-long term, the practice was adopted by the Devendra Fadnanvis-led BJP-Sena government as well.

In the months before the state Assembly elections last year, a number of sugar barons switched parties, but many of these political calculations went awry when the Congress, NCP and Sena joined hands to form the government.