High cotton price demand hurts Maharashtra govt

The Maharashtra government has decided it cannot afford the demand by farmer bodies and political parties to ensure cotton growers get Rs 6,000 a quintal.

It will, instead, pay a per-hectare bonus in addition to the central government’s Minimum Support Price (MSP). The details can be made public, it decided, only after the coming elections to local bodies across the state. A Congress party minister, who did not want to be identified, said, “They will be paid about Rs 1,500-2,000 per hectare above the MSP.”

Even this, he said, would mean a Rs 800-1,000 crore hit in the current financial year on the state treasury. A political problem, since both the Congress and its coalition ally, the Nationalist Congress Party, has pressed for the Rs 6,000 a hectare payment. The central MSP is Rs 3,300 a qtl. Opposition parties are supporting the demand for Rs 6,000 a quintal.

 

The central government has said anything above the MSP is the state government’s responsibility. Chief minister Prithviraj Chavan told Business Standard the Centre was clear on being unable to give any financial help for extra payment.

Cotton procurement centres in the state have yet to become operational. Union agriculture minister Sharad Pawar (who’s also head of the NCP) said procurement had already begun in all other cotton growing states. Adding: “The central government will not intervene, nor will it provide any funds if the government takes a decision to pay additional amount to cotton growers. Punjab has announced payment of an additional Rs 50 above the the MSP. It is up to the Maharashtra government to take a final decision in this regard.”

Chief minister Chavan told Business Standard: “The cabinet held a detailed discussion on the price to be paid to cotton growers above the MSP declared by the Centre. The issue was also deliberated at the all-party meeting. The cabinet has decided to pay an additional price based on per-hectare, not per-quintal, to growers.” The decision, he said, could not be announced in view of the code of conduct in place till local body polls were complete.

The decision is likely to be announced in the coming winter session of the state legislature, slated to begin later this month at Nagpur.

The government has estimated production of 42.5 million qtls from 4.1 million ha during the current season. It has projected a cotton purchase of 17.5 million qtls and it would have to provide Rs 513 crore as margin amount to the Maharashtra State Cooperative Cotton Growers Marketing Federation. If the bonus was to be paid on a per-quintal basis, sources said the government would have to pay out Rs 18,000 crore.