Accepting the Tuteja Committee report on revitalisation of the sugar sector, government on Monday announced sops for sugar mills, including a moratorium on both interest and principal for two years.

The revitalisation programme would be applicable for the 2002-04 sugar season, Finance Minister P Chidambaram said while presenting the Budget for 2005-06.

NABARD would be the nodal agency for this restructuring package, he said adding it is working with Indian Banks Association to come out with a strategy for restructuring of high interest bearing loans.

He also said loans from Sugar Development Fund would continue to be two per cent below the bank rate.

The Tuteja Committee had recommended rescheduling the debt of over Rs 6,500 crore (Rs 65 billion) in the sugar industry.

It said all loans as on March 31, 2004 could be deferred or rescheduled to long-term loans repayable in 10-12 years, besides a moratorium of both interest and principal for two years starting 2004-05.