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The defaulters among the farmers must be one relieved bunch, thanks to the Rs 60,000-crore loan waiver announced by the Centre. Sugarcane farmers’ net profit this season is expected to jump 5-6 times thanks to the waiver, say farmers and millers. Tripartite agreement Routinely, farmers, sugar mills and banks enter into a tripartite agreement on sugarcane. Banks extend a crop loan to the farmer who raises the sugarcane crop and sells it to the mills at a price fixed by the Centre. The mill deducts the bank loan and interest before paying the farmer.

Typically, over 60-70 per cent of the cost of a tonne of sugarcane goes to the bank. This will now be paid to the farmer. Depending on the costs, the farmer usually makes a net profit of about 10 per cent. Till recently, the net income from cane was estimated at about 20 per cent but in the last two seasons, because of the high costs of harvesting, this has dropped to about 10 per cent.

Take home money According to a farmers’ representative, banks disburse about Rs 20,000 an acre as sugarcane crop loan. Taking into account the interest, the total repayment to the banks is about Rs 22,000. Now, thanks to the loan waiver, the small and marginal farmers eligible under the waiver will take home about Rs 22,000 an acre more for the current season.

Effectively, taking an average output of about 40 tonnes an acre, that works out to about Rs 550 more a tonne – that is a net profit of 5-6 times more on cane, they say.

Industry sources said that with the farmers getting a hint of a major concession in the offing ahead of the Budget, they had actually approached the millers to hold on to the cane payments to avail themselves of the benefit.

Source: Business Line dated 05-03-08

Indian Market News Budget, Chidambaram, farmers, Loans, Waiver of agricultural loan

The Finance Minister, Mr P. Chidambaram, on Tuesday made it clear that there would be no rollback on any Budget proposals even as he assured industry that any ‘inadvertent errors’ would be corrected.“There is not going to be any rollback. But if any inadvertent error… someone pointed out pesticides, any inadvertent error, we are modest enough to correct it. So, there is no rollback,” Mr Chidambaram told captains of industry at a post Budget meeting organised by the Confederation of Indian Industry (CII) here today.

On interest rates, Mr Chidambaram felt that there was scope for deposit and lending rates to drop, but the matter was in the domain of RBI.

He also rejected the tyre industry’s demands that the existing inverted duty structure on rubber be corrected. It was pointed out to him that natural rubber attracted basic customs duty of 20 per cent, when tyres attracted customs duty of 10 per cent.

“There are 20 Members of Parliament from Kerala who are opposed to duty cut on natural rubber. I think what they say is a genuine case… Not all inverted duty can be corrected. It is not possible. I don’t think there can be a clean up of inverted duty. You have to suffer some inverted duty. Every time you enter into FTA or early harvest programme, there will be inverted duty. We are doing our best to correct as many as possible. If you tell me of a duty other than rubber, I am willing to address it,” Mr Chidambaram said. Some of the industrialists representing the auto sector felt that there was no merit in the levy of 24 per cent excise duty on ‘other than small cars’ category, when the excise duty on small cars was pegged at 12 per cent. “You are clubbing the large cars with pan masala category which also attracts 24 per cent,” a CII member pointed out.

Source: Business Line dated 05-03-08

Indian Market News BSE, Budget, Chidambaram, Indian Markets, Indian Sensex, midcap, NSE