Sugar industry watchers have welcomed the news that the Maharashtra Government is to liquidate 13 sugar cooperatives, often seen as the stronghold of powerful, local politicians.
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Decreasing prices and a lack of sugar cane has forced the decision, as farmers were being left with late payment of reduced prices. The 13 units had run up losses amounting to Rs. 200 crores (US$41.1m), and similar amounts in debt owed to entities such as the government.
Cooperatives are funded 30% by the government and 10% by farmers. The rest is sourced in financial institutions, with guarantees from the state government.
Concerns had been raised that there would be little follow-through on the plan to liquidate the cooperatives, however sources told the local newspaper The Hindu that the Government is now intent of action because “things are indeed going out of hand. Firm steps are needed to save the sector.”
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By GlobalData
