Maharashtra approves ₹1,600 crore loan guarantees for 11 sugar mills ahead of polls

The sops announced are in addition to sops and schemes worth around ₹90,000 crore announced by the state government in the state budget for 2024-25.

Mumbai: Close on the heels of approving loan guarantees worth ₹675 crore for five sugar mills linked to leaders of the ruling Mahayuti or those who are likely to join it, the state government has approved another set of loan guarantees worth ₹1,600 crore for 11 sugar mills linked to politicians from ruling parties.

A loan guarantee means that the state government will have to repay the loan amount if sugar factories fail to do so. (REPRESENTATIVE PHOTO)

An order to this effect was issued by the state cooperation department on Friday. This is in addition to sops and schemes worth around ₹90,000 crore announced by the state government in the state budget for 2024-25.

“The state government has approved a loan guarantee worth ₹1,590.16 crore to 11 sugar mills under ‘Margin Money Assistance’, a scheme run by the National Cooperative Development Corporation (NCDC),” stated the order issued by the state cooperation department on Friday.

A loan guarantee means that the state government will have to repay the loan amount if sugar factories fail to do so. Sugar mills play an important role in elections as they influence members and farmers linked to the mills. The government’s decision to extend loan guarantees to 11 sugar mills, mostly located in western, north and central Maharashtra, is being seen as an attempt to make fresh inroads in these areas where the ruling coalition received a drubbing in the recent Lok Sabha polls.

According to terms and conditions mentioned in Friday’s order, the floating rate of interest for the loans is 9.81% and the amount is expected to be repaid over eight years including two years of the moratorium period.

“The loan amount should be used to repay the existing loan from the concerned banks or financial institutions and the remaining amount can be used for starting the crushing season,” the order states, adding, “The state government, regional directorate and NCDC shall visit the sugar mill after a period of every three months to see if the amount is being used appropriately or not.”

Sugar mills are prohibited from using the loan amount to start new projects or invest in immovable assets without approvals from the state government and the NCDC, the order mentioned.

Beneficiaries of the government’s latest largesse include the Shri Tatyasaheb Kore Warana Sahakari Sakhar Karkhana in Panhala in Kolhapur, linked with Jan Surajya Shakti Party MLA Vinay Kore. The party, which supports the BJP, was in the news recently, with former home minister Anil Deshmukh alleging its leader Samit Kadam had approached him on behalf of Devendra Fadnavis during the previous Maharashtra Vikas Aghadi (MVA) government’s term to implicate Uddhav Thackeray and Ajit Pawar by signing affidavits against them. Fadnavis has denied the allegations.