Maharashtra not to exceed MSP for cotton purchase

In an attempt to do away with populist measures, the state government will not give higher prices to farmers under monopoly cotton purchase scheme than minimum support price (MSP) announced by the central government.

A decision to this effect was taken at the weekly cabinet of the state government. Chief Minister Vilasrao Deshmukh said, "from 11th of this month, 100 cotton purchasing centers will start functioning across Vidarbha, Marathwada and Northen Maharashtra."

He further added that government has agreed to give guarantees up to Rs 1,900 crore of bank loan to Maharashtra Cotton Federation Cooperative Limited and margin money of Rs 480 crore this year.

It is expected that, 170 to 180 lakh quintal of cotton would be procured under the scheme and MSP announced by central government for H-1 variety is Rs 1,980 per quintal and Rs 1,760 per quintal for other varieties of cotton.

Deshmukh admitted that as a populist measure, the government used to announce prices higher than MSP decided by the central government and then end up incurring losses, on the purchase scheme and not making payments of farmers in time.

However this year we have decided that, not to exceed MSP and make 100 per cent payment to farmers within 15 days from his cotton is procured, he added.

He claimed, "accumulated losses in last ten years of the monopoly purchase scheme have gone up to 5300 crore but considering the fact that, this year market prices are higher than MSP, scheme actually might end up earning profit".