Buoyed by the strong response from sugar mill-owners for funds from the Sugar Development Fund (SDF), the food ministry has sought an additional Rs 100 crore to meet demands from millers under various heads. The Sugar Development Fund (SDF) was established in 1982 via an act of Parliament for financing activities of the sugar industry and matters connected thereof. The SDF grants funds for modernisation of the sugar industry, development of co-generation facilities, developing ethanol facilities and research and development of cane amongst other activities.
Under a new scheme, funds from the SDF are also used for subvention of interest on loans taken by mills from banks for payment of sugarcane dues and sugarcane arrears for the 2006-07 and 2007-08 seasons respectively. The sugar season runs from October to September.
As per the Sugar Development Act 1982, funds for the SDF are collected through the imposition of a cess on sugar at the rate of Rs 15 per quintal, which has now been raised to Rs 25 per quintal. The SDF primarily grants loans to sugar industry on four major heads, namely co-generation, modernisation, ethanol and sugarcane development. According to official sources, since April 2008, around Rs 137 crore has already been spent out of the 2008-09 budget of Rs 355 crore, while proposals worth more than Rs 200 crore are in the pipeline for consideration.
?Funding under the SDF has stepped up due to the government?s move to allow sugar mills to avail loans for sugar development without the statutory bank guarantee this year and also due to various others measures to ensure that flow of funds are channelised properly,? a senior government official said. He said that the need for additional funds was generated because of substantial number of pipeline projects.
According to official sources, till date, out of the total budget of around Rs 140 crore for co-generation, already 87 crore has been spent, while Rs 42 crore has been spent from the budget of around Rs 140 crore for modernisation of sugar mills. ?The spending has been most for co-generation activities by mills as it is a costly proposition,? a senior industry official said.
However, mills have not shown much enthusiasm towards availing funds meant for sugarcane development and out of the total budget of around Rs 25 crore, just around Rs 1.07 crore has been spent till date. For ethanol production around Rs 6.54 crore has been spent as against a budget of Rs 9 crore.