Maharashtra's problem over cotton purchase

By Our Special Correspondent

MUMBAI, OCT. 16. The Maharashtra Government, which has been offering remunerative prices for cotton, is now in a quandary with an accumulative loss set to touch around Rs. 4,000 crores this year. The Government lacks sufficient funds to start the purchase but has assured the farmers of finding some means to continue with the procurement scheme.

A large quantity of stocks accumulated through the scheme remains unsold. With the prices of imported cotton expected to be cheaper than those offered by the Government to the farmers, stocks with the Government are expected to increase by the end of the season.

The Chief Minister, Mr. Vilasrao Deshmukh, had often spoken on the non-viability of the scheme and the lack of political will to restructure it. But at a recent all-party meeting, everyone including Mr. Deshmukh was silent about this aspect. If the Maharashtra Apex Co-operative Bank provided loans despite last year's default and the RBI permitted higher release of funds, it has been proposed to pay farmers with Kisan Vikas Patras. This means a portion of the money will revert to the State as its share on small savings.

Asking poor farmers to hold the money in the small savings for a period may also face resistance. The bank too is unlikely to release more loans, unless Rs. 450 crores is paid back.

The Government plans to pay up to Rs. 2,300 a quintal of cotton brought to the purchase centres. But this would result in a cumulative loss of Rs. 2,749 crores, and the loss would go up to Rs. 4,249 crores by the end of the season.

Also, sources told The Hindu that as against a total loan requirement of Rs. 1,100 crores, the RBI had set a limit of Rs. 500 crores for the season. This sum was too little to implement the scheme.

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Section  : Other States
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