Chandigarh, March 12
In what is being described as “unprecedented”, “unconventional”, “bold and positive” move, the Haryana Cabinet last night decided to stand guarantee for Rs 7-crore loan to be given by the Haryana State
Industrial Development Corporation (HSIDC) to a sick unit.
Though the use of adjectives depends upon the loyalty of the person using them, the fact remains that never in the history of Haryana, has the state government stood guarantee for a loan given by its own organisation (or even by any organisation) to a private party.
The loan will be given to the Naraingarh Sugar Mills, which owes about Rs 13 crore to canegrowers of the area. The mills is closed these days. It did not start crushing operations this year at all.
Ostensibly, the loan is being advanced to the mill so that it can clear the dues of the farmers. The state government pays to the cooperative sugar mills to enable them to clear the dues of the canegrowers as well as to enable them to pay state advisory price (SAP) to the growers, which is the highest in Haryana. But never in the past a similar loan facility had been extended to a private sector mill.
According to informed sources, the proposal to grant a loan to the tune of Rs 13 crore to the mill was initiated by the Agriculture Department. The government passed on the proposal to the HSIDC, the Board of Directors of which expressed certain reservations about it. To overcome these reservations, the Cabinet met yesterday and agreed to make up for any loss suffered by the HSIDC on account of a default by the mill, the credit-worthiness of which is under a cloud.
The HSIDC, which holds 5 per cent equity in the mill, will
extend the loan against colateral security. But if the mill fails to repay the loan, the HSIDC will adjust the loss against the dividend to be paid by it to the government.
Interestingly, during the debate on the Budget proposals in the ongoing session of the Vidhan Sabha, Chief Minister Om Prakash Chautala reacted sharply to a suggestion by former Finance Minister Mange Ram Gupta, that it should make up the difference between the SAP and the statutory minimum price being paid by the Saraswati Sugar Mill, Yamunanagar, to the cane growers. Mr Chautala, who intervened in the debate, said the public exchequer was not meant to fill the coffers of a private capitalist.
Sources in the Agriculture Department say there was no option before the government but to extend loan to the mill in order to save the sugar industry in the area and to protect the interests of the canegrowers, who still had a large quantity of sugarcane standing in their fields. The department, they said, considered several alternatives, including the takeover of the mill. But there were legal hitches in taking such a step. Therefore, it was considered prudent and in the interest of the farmers to extend a loan to the mill.
It is learnt that the mill would start crushing cane as soon as possible after the disbursal of the loan. The crushing season, which starts towards the end of October or the first week of November, comes to an end in May. It is not known if the mill would pay the SAP or the SMP to the canegrowers for last year as well as for the current season.
The sources say to prevent the siphoning off of the loan by the mill, the government has decided that the payment to the growers would be made under the supervision of the Ambala Deputy Commissioner.
