Public RelationsCCI yet to repay Rs 4,000 cr loans taken for cotton buys
The Cotton Corporation of India (CCI) has so far borrowed about Rs 8,000 crore from banks this season to carry out procurement operations on behalf of the government, half of which is yet to be repaid.
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"We have so far taken Rs 8,000 crore from banks this season to procure cotton. We have already paid Rs 4,000 crore. We repay the loans as and when the government provides us with funds and also from the sale of our stocks," said CCI Chairman and Managing Director Subhash Grover.
Grover added that the government has provided Rs 650 crore to the CCI till March-end this year for procurement. "Funding has never been a problem for us. The government compensates against all losses. We will seek more funds after the budget," he said.
The CCI purchases cotton from farmers at minimum support prices (MSP) announced by the government and offloads the stocks at prevailing market prices. Any loss incurred during such an operation is fully compensated by the government.
The CCI has procured record 89.4 lakh bales (one bale equals to 170 kg) of cotton so far this season against 27.5 lakh bales in the last season, Grover informed, adding that the corporation has also offloaded 79.4 lakh bales out of the purchased stocks.
Both the CCI and Nafed — the two major procurement agencies — had to buy on behalf of the government in huge quantities this year to provide remunerative prices to farmers and avoid distress sales by them as domestic traders reduced purchases following a substantial hike in the MSP.
The Centre has increased the MSP of standard cotton (long staple) to Rs 3,000 per quintal for 2008-09 from Rs 2,030 a quintal last year. The MSP of medium staple cotton has been raised to Rs 2,500 from Rs 1,800 per quintal last year.
Following persistent demand from industry to make cotton available at a cheaper price after the sharp hike in the MSP, the government had, in February, directed the CCI to offload the commodity at discount, adding to the subsidy burden to be shouldered by the Centre.