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New Delhi, March 11 A Bill seeking to amend the Sugar Development Fund Act 1982 and the Sugar Cess Act 1982 to meet the interest subvention cost and to empower the Central Government to increase the cess on sugar was introduced in the Lok Sabha on Tuesday.

The Sugar Development Fund (Amendment) Bill, 2008 contends that the existing provisions of the Sugar Development Fund Act 1982 do not specifically provide for payment of interest subvention from the Sugar Development Fund (SDF) on loans given to sugar factories by banks or financial institutions.

It said the Government has approved a scheme in December 2007 to provide loans for sugar factories from banks on the basis of excise duty paid and payable in 2006-07 and 2007-08 seasons on production of sugar with full interest subvention up to a maximum of 12 per cent per annum.

Out of this, five per cent would be provided through budgetary support and the balance seven per cent from the SDF to utilise the loans proceeds for payment of sugarcane arrears of 2006-07 and dues of 2007-08 season (October-September).

As claims for interest subvention were likely to be received from February 2008 itself, the provisions of the said Act needed to be amended.

In the case of the Sugar Cess Act 1982, it was meant for imposing cess for development of the industry and it imposed a cess on sugar at rates not exceeding Rs 15 per quintal.

The main source of funds for the SDF was by way of collection of cess.

As per the estimates of the receipts into and disbursements from the SDF, in the next one year and two months i.e., up to March 2009, there would not be sufficient funds in the SDF to meet the expected expenditure on account of interest subvention.

In order to improve the accretion to the said fund to meet the requirements of various schemes approved by the Government and to ensure that sufficient fund is available for carrying out other purposes of the Act, there was immediate need to amend the Cess Act. The amendment is aimed at empowering the Central Government to increase the cess from the extant rate of Rs 15-25 per quintal and it would specify the increase in cess as per requirements of funds from time to time.

The proposed Bill also seeks to replace the Sugar Development Fund (Amendment) Ordinance 2008, which was promulgated by the President on February 5, 2008.

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