:Chandigarh: The Haryana govt extended loans to cooperative sugar mills despite poor recovery of dues, with Rs 5,673.26 crore outstanding against the mills at the end of 2024-25, according to Comptroller and Auditor General of India (CAG).The state govt disbursed another Rs 290 crore to the mills during 2024-25 but did not receive any repayment against the previous loans, showing inadequate efforts to recover the outstanding principal, says the audit report.The loans had been sanctioned with conditions that they would be repaid in five equal annual instalments along with interest at 8.5% per annum. However, there was no budget provision during 2024-25 for the recovery of the principal amount.The CAG said outstanding loans and advances given by the state increased from Rs 7,884 crore in 2020-21 to Rs 18,070 crore in 2024-25. At the same time, recoveries remained low, ranging between Rs 238 crore and Rs 301 crore.The audit noted that the govt earned only Rs 121 crore as interest on its loans during 2024-25, translating into an effective return of just 0.73%, against an average borrowing cost of around 6.84%. This resulted in a negative interest spread of about 6.11 percentage points.The CAG said the situation warranted a relook at the govt‘s loans and advances policy. The finance department, during the exit conference held in Feb, assured CAG that it would examine the issue after analysing the position in neighbouring states.The report also pointed out that loans and advances grew by 18.87% during 2024-25, with major disbursements going to education, medical and public health, agriculture and allied activities, cooperative sugar mills and Haryana Rail Infrastructure Development.Sugar mill loan exposureOutstanding loans at 2024-25| Rs 5,673.26 croreFresh loans during 2024-25 | Rs 290 croreRepayment received during year| NilInterest stipulated on loans| 8.5%Repayment period | Five equal instalmentsTotal state loans & advances| Rs 18,070 croreInterest earned in 2024-25| Rs 121 croreEffective return | 0.73%Average govt borrowing cost | 6.84%Negative interest spread | 6.11 percentage points
