Chennai, Jun 7 The Centre’s sugar mills package would not benefit Tamil Nadu which required specific measures such as interest subvention to ease the financial strain faced by the sector, Chief Minister K Palaniswami today said.
In a letter to Prime Minister Narendra Modi, he said the sugar industry in the state was going through an extended cycle of negative growth and low capacity utilisation due to drought.
The sugar industry in the state “is under severe financial strain,” which in turn affects the livelihood of lakhs of farmers, he said.
Aimed at helping the cash strapped sugar industry, the Centre today notified several measures includes fixing sugar price at Rs 29 per kg.
It had yesterday announced a Rs 8,500 crore package to boost farmers’ income by creating a buffer stock for sugar, enhancing ethanol production capacity and fixing a minimum selling price to cut mill losses.
Citing media reports on the Union Cabinet approving measures to improve the liquidity of sugar mills, Palaniswami said creation of buffer stock will be useful only to mills that have not yet cleared the Fair and Remunerative Price (FRP) and which also have excess sugar stock.
“These sugar mills are mostly confined to Maharashtra and Uttar Pradesh,” he said.
On fixation of minimum sugar price of Rs.29 per kg for the domestic market, he said this may not ensure cost recovery in Tamil Nadu due to poor recovery and low capacity utilisation precipitated by drought.
“For a State with low sugar production, the proposed stock limit on sugar will further aggravate the financial crisis of the mills and will affect the payments to farmers,” he said.
Also, the sugar mills have arrears of Rs.1510.46 crore towards payment of State Advised Price from 2013-14, he noted.
As regards the proposed financial assistance to ethanol projects, it will not provide any immediate relief to the sugar mills due to low availability of sugarcane.
Considering such precarious conditions facing the sugar industry in Tamil Nadu, he sought the Prime Minister’s intervention to consider specific measures as a special case to provide relief to the state’s sugar sector.
Exemption from stock holding limits, interest subvention on loans availed by sugar mills for payment of FRP for 2017-18, were among the key measures requested by Palaniswami.
He also sought extension of production subsidy of Rs 5.5 per quintal of sugarcane announced earlier to the farmers and mills in the state without linking it to ethanol supply and Minimum Indicative Export Quota compliance.
As the sugar mills in the state were unable to fulfill the conditions being set for various incentives, Tamil Nadu may be exempted from the same during this season, he appealed.
He requested the Prime Minister to favorably consider the suggestions and direct the Ministry of Consumer Affairs, Food and Public Distribution accordingly.