New Bank Guarantee Mandate for Maharashtra's Sugar Mills Sparks Debate

The Maharashtra government mandates a Rs 10 crore bank guarantee for sugar mills on lease or partnership to ensure timely Fair and Remunerative Price (FRP) payments to farmers. While aimed at securing FRP dues, concerns arise about the amount's adequacy due to the scale of operations of these mills.

The Maharashtra government has implemented a new policy requiring a Rs 10 crore bank guarantee from sugar mills that operate on a lease or partnership basis. The objective is to ensure timely payment of the Fair and Remunerative Price (FRP) to sugarcane farmers, according to state officials.

This move by the Cooperation Department aims to secure FRP dues during the crushing season. However, there are concerns that the mandated amount may be insufficient, given the extensive operational scale of these mills. Many cooperative sugar factories are financially strained and now lease out operations under securitisation law criteria.

Farmers' leader Raju Shetti welcomes the decision but argues that the guarantee amount should be higher to cover mills' significant payable FRP, which ranges between Rs 100 and Rs 150 crore. He believes the current Rs 10 crore requirement is inadequate.

(With inputs from agencies.)