The Maharashtra State Assembly on Monday discussed the sugar mill auction scam where sugar mills auctioned at a lesser price were purchased by politicians.

Deputy Chief Minister Ajit Pawar, who is himself facing allegations for purchasing a sick sugar mill in Satara at a lower price, answered the questions raised by Opposition leader Devendra Fadnavis. 

Pawar said beginning with the first Chief Minister Yashwantrao Chavan to Devendra Fadnavis (who was CM for five years (2014-2019), the State government has offered guarantees to sugar mill loans without any hesitation. 

“After Uddhav Thackeray became Chief Minister around five mills were given guarantees and then the Chief Minister clearly stated that the State government would not stand guarantee for cooperative sugar mills (to raise loans from banks). Over the past 2.5 years, no mill has been given a guarantee on its loan,” said Pawar. He added that sugar mill directors will now have to run the show on their own strength and raise loans from banks. Pawar admitted that many banks were facing a financial crisis because of the loans given to sugar mills. 

Loans before sugar season 

Cooperative sugar mills opt for bank loans before the beginning of the sugar season to pay harvesting contractors, to overhaul machinery, and for other works. Mills ask the State to stand guarantee for the bank loans. Many mills face problems in getting bank loans as they are ineligible for the loans because they don’t fulfill the National Bank for Agriculture and Rural Development (NABARD) norms. Mills face problems in raising loans because of their negative net disposable resources (NDR). Under these circumstances, the State government steps in to give a guarantee. 

Interestingly, when Uddhav Thackeray took charge as Chief Minister in November 2019, the government cancelled the guarantee on loans of over Rs 300 crore taken by seven sugar mills owned by BJP leaders.

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