Cotton sales row deepens as traders question move to offload stocks
The government may incur losses to the tune of R1,100 crore if it offloads cotton stocks worth R5,800 crore now despite a recent pick-up in the fibre's price as it has to factor in costs on interest payment against bank loans, staff, insurance and storage, said a senior official.
Earlier this month, Confederation Of Indian Textile Industry (CITI) deputy chairman SV Arumugam asked the government to offload cotton stocks procured from farmers as the fibre's prices had “increased steeply because of an artificial shortage of cotton in the market, which is created partly by hoarding of cotton by traders, and partly by the non-release of procured cotton by the Cotton Corporation of India (CCI) and other procurement agencies”. However, the traders' body — the Cotton Association of India (CAI) — disputes CITI's claim, saying the 10% rise in domestic cotton prices over the past six months or so is quite ‘normal’ compared with a 20% spurt globally. "The mandate of procurement agencies is to provide minimum assured returns to farmers to prevent distress sales by them, but the government isn't obligated to offload the stocks at losses so that bulk consumers make gains," said
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