Mumbai: Crisis in Maharashtra Sugar Industry as Loan Proposals Face Rejection Amidst Dispute

Mumbai, 27th November 2023: The sugar industry in Maharashtra is grappling with a significant crisis due to a dispute between the Maharashtra State Co-operative Bank and the Maharashtra State Government over loan arrears. The State Co-operative Bank has refused to approve loan proposals worth Rs 1,500 crore for 12 sugar mills, despite the government’s assurance, leading to concerns about how factory owners will pay sugarcane farmers.

Most of the affected sugar mills are reportedly owned by leaders of the Nationalist Congress Party (NCP). The dispute has left farmers in a precarious situation as the delay in obtaining the loan raises questions about timely payments.

In response to the crisis, the state government has initiated a debt guarantee scheme to support cooperative sugar mills during the sugarcane season. Under this scheme, distressed cooperative sugar mills are eligible for loans from the State Cooperative Bank at an 8 per cent interest rate, modelled after the ‘Margin Money Loan’ scheme of the National Cooperative Development Corporation.

In the first phase, five factories, including Bhausaheb Chavan (Nanded), Chhatrapati Shivaji Maharaj (Pune), Vasantrao Kale (Pandharpur), Sant Kurmadas (Madha Solapur), and Jaibhavani (Gevrai, Beed), were sanctioned a term loan of Rs 361.60 crore. However, the Co-operative Bank, dissatisfied with the conditions imposed by the Finance Department and concerns about arrears, decided to terminate the scheme within a month.

Other factories are hesitant to fulfil the challenging conditions set by the state government for loan guarantees. The bank has also rejected loan proposals from additional factories, citing the commencement of the harvest season.

Sugar mills, desperate for immediate financial support, have approached Deputy Chief Minister Ajit Pawar and Cooperation Minister Dilip Valse Patil. Dozens of other factories have submitted loan proposals totalling around Rs 1500 crore to the cooperative department, which have been stalled for a month.

Factories such as Mula Cooperative Sugar Factory (Ahmednagar), Rajgad Sugar Factory (Bhor Pune), Loknete Sundarraoji Solanke Sugar Factory (Beed), Kisanveer (Satara), Raosaheb Pawar Ghodganga, Kukdi Sugar Factory (Ahmednagar), Dnyaneshwar Factory (Ahmednagar), Agasti (Ahmednagar), Kisanveer (Khandala), Hutatma Kisan Ahir Factory (Sangli), and more, are waiting for loan approvals.

Stakeholders in the industry, including Sanjay Khatal, Managing Director of Sugar Union, have demanded swift action, emphasizing that the loan proposals, backed by government guarantees, should be accepted without further delay. The industry awaits a resolution to this crisis that directly impacts the livelihoods of farmers and the functioning of sugar mills in the state. Efforts to reach Cooperation Minister Dilip Valse Patil for comment were unsuccessful. The situation remains tense as the government and stakeholders seek a viable solution to the ongoing dispute.