The Hindu : Maharashtra cotton purchase scheme mired in corruption

Online edition of India's National Newspaper
Sunday, Dec 15, 2002

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Maharashtra cotton purchase scheme mired in corruption

By Mahesh Vijapurkar

NAGPUR DEC. 14. The three-decade-old Monopoly Cotton Purchase Scheme (MCPS) in Maharashtra has been incurring losses since its inception in 1993-94 due to "massive corruption from the field level".

The losses, a phenomenal Rs. 4,500 crores, meant an annual interest outgo of Rs. 400 crores and more. The MCPS was intended to protect the cotton farmer from businessmen who bought on behalf of the textile mills and exporters and cheated the grower. Now, the employee and the politician have replaced the businessman.

Competitive pricing policy, driven also by populism, by successive Governments, is the crux of the issue though the intent was to benefit the growers. It was during the Shiv Sena-BJP rule that prices suddenly jumped to Rs. 2,300 per quintal. Though the present Congress Chief Minister, Vilasrao Deshmukh, had called it "unrealistic", his own party, in its poll manifesto, had demanded Rs. 2,500. According to a law, enacted in 1971, all cotton grown in the State would be brought to purchase centres by the Cotton Growers' Cooperative Marketing Federation and sold for prices fixed on the basis of the Centre's support price. Later, the State Government started paying bonus to the growers from its profits.

About 30 lakh farmers cultivate cotton, mostly in Marathwada, Vidarbha and Khandesh in the north. When appropriate prices were not available despite terminal markets commanding higher prices, the scheme was introduced. From 1972 to 2001, 93.14 crore quintals of cotton was procured at a cost of Rs. 23,304 crores. The support price in the first year was Rs. 231; it is ten times that now.

Interestingly enough, the scheme originally conceptualised that a levy of one to three per cent on prices paid was to be used for setting up processing facilities. But, according to a Government report, about Rs. 221 crores is kept locked up.

Though the practice was abandoned in 1994, the unspent money had not been returned to the farmers. Only Rs. 5.45 crores was used as share capital for cooperative spinning units. Even these units tell a sorry story.

Of the 226 set up till 2000, only 46 with a spindle capacity of 28.53 lakh are in production, according to official statistics. In 1999-2000, they produced yarn worth Rs. 549 crores, underscoring that each spinning mill was a profit centre for the local politician who made his gains even before the plant was set up by way of cutbacks.

Trouble started when realisations did not match the expenditure of a 5,000-strong employee federation. A periodic increase in the purchase price of cotton is, perhaps, normal but the difficulties came when corruption, always a feature of all schemes, took root and deepened. Right from grading the cotton to weighing it, the malaise set in and, according to a recent presentation made by Vasant Pukhare, MLA, it is prevalent at all levels.

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Maharashtra cotton purchase scheme mired in corruption