The minister, who belongs to the NCP, defaulted on state-guaranteed loans to the sugar cooperative he controls in Dhule district. The default followed a classic pattern: the sugar factory run by the cooperative shut down a year after taking huge loans (10 times its total assets valued at Rs 5 crore) from the Industrial Development Bank of India and the Industrial Finance Corporation of India. And this is not an anomaly. Sugar factories and spinning mills in the cooperative sector—mostly controlled by politicians who use these as conduits for extracting money—owe banks and financial institutions Rs 750 crore in unpaid debts. A cash-strapped state government is now liable to clear the debts since it had stood guarantee for the loans. As for the loan to Sindhkhenda Sugar Cooperative, the tribunal has also made clear its plans to attach the government’s treasury and its bank account with the rbi if the debt is not cleared within a fortnight.
Chief minister Vilasrao Deshmukh, who also holds the cooperative portfolio, is unlikely to do much because most of those involved belong to the NCP, his coalition partner.