Uttar Pradesh sugar mills owe over 2,889 crore as interest for delayed payments to farmers

The case of interest on delayed payments to sugarcane farmers by sugar mills in Uttar Pradesh is becoming clearer. State goverhment has estimated interest payments of Rs 2,889.64 crore for four crushing seasons: 2015-16, 2018-19, 2019-20, and 2020-21

Harvir Singh

Published: Oct 3, 2024 - 19:38 Updated: Oct 3, 2024 - 19:51

Uttar Pradesh sugar mills owe over 2,889 crore as interest for delayed payments to farmers

The case of interest on delayed payments to sugarcane farmers by sugar mills in Uttar Pradesh is becoming clearer. State goverhment has estimated interest payments of Rs 2,889.64 crore for four crushing seasons: 2015-16, 2018-19, 2019-20, and 2020-21. This was mentioned in an affidavit submitted by the state's Sugarcane Development Secretary and Cane Commissioner during a hearing before the Lucknow Bench of the Allahabad High Court on 1, October 2024. Regarding the timeline of interest payment to farmers state government has requested to give some time.

Sardar V M Singh, the convenor of the Rashtriya Kisan Mazdoor Sangathan, whoe is the petitioner on behalf of farmers in the High Court, told Rural Voice that the total interest liability, which is still being assessed, may exceed Rs 15,000 crore. According to the affidavit presented by the state government in court, the interest amount for the 2015-16, 2018-19, 2019-20, and 2020-21 crushing seasons is Rs 2,889.68 crore. The affidavit also gave details about the interest owed for delays in payment from the 2015-16 to 2023-24 seasons. While the amount for 2015-16, 2018-19, 2019-20, and 2020-21 is nearly final, the interest for the other years is still being assessed.

VM Singh told the Rural Voice that total interest owed could be close to Rs 15,000 crore. The state government has asked the High Court for more time to respond about the interest payments for the past four years, which are nearly finalized.

Delayed payments by private sugar mills, including state sugar corportion's and cooperative sugar mills, have been a recurring issue in Uttar Pradesh. Some mills are still behind on payments from two years ago. As per sugarcane control order, 1966 sugar mills sholud make payment to farmers within 14 days of sugarcane supply to sugar mill, but this has often not been followed. However, in the past two years, many sugar mills have made timely payments, due to better sugar prices and profits from ethanol production.

With the High Court’s ongoing public interest litigation (PIL) on this matter, which started in 2006, the pressure on mills to make timely payments will likely increase. This legal case is expected to highlight the issue further, pushing mills to promptly fulfil their obligations to farmers. Sugarcane price and delayed payment remais alway a political issue in Uttar Pradesh.