Following the dip in the sugar sale due to Coronavirus pandemic and mounting cane arrears, there is a demand to remove the sugar sector from RBI’s negative list. This will help in enhancing the cash credit limit of the mills by infusing liquidity and mills could be able to clear pending cane arrears.
UP government and sugar mills from Maharashtra had already written a letter and urged the Centre for removing the sugar sector from the RBI negative list for infusing fresh liquidity.
According to a news report published in Business Standard, following these letters, Vivek Shukla, director, sugar policy, department of food and public distribution, Union food and consumer affairs ministry, has written to the finance ministry to consider the stand of the UP government and Maharashtra mills, and to request the RBI for removing mills from the negative list, “which will ease working capital under the prevailing conditions/restrictions”.
The lockdown imposed by the government to prevent the spread of Coronavirus pandemic has affected sugar sales. Mills are unable to sell the sugar amid lockdown, due to which sugar stocks are piling up in warehouses. Due to lockdown, the sugar sales in March and April, 2020, was lower by about 10 lakh tonnes. Due to low sales, mills are under deep financial crisis and are unable to pay cane dues.
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