Mantralaya sources told The Financial Express that still the federation had received Rs 455 crore from the government through a contingency fund which was to be repaid before March 1996. However, it had failed to repay both the principle and interest.

The federation will require Rs 190 crore from the state government to continue implementation of MCPS. The accumulated losses incurred by the federation has reached a record Rs 1,300 crore up to October this year. The federation incurred losses of Rs 120 crore during 1993-94 which rose to Rs 160 crore in 1994-95, Rs 522.90 crore in 1995-96, Rs 377.95crore in 1996-97 season and Rs 1,152.02 crore in 1997-98.

The state government has so far declined to sanction Rs 190 crore while blaming the federation for its failure to keep its repayment promises. However, federation sources said that the government should provide the necessary financial assistance at the time of presentation of supplementary demands to the state legislature in the winter session in December.

The federation is likely to start procurement from the first week of November this year though the final directives have yet to be received from the government. The federation is also worried over a likely bumper cotton crop in view of the prolonged monsoon. It is estimated that there will be a production of at least three million bales of cotton as compared to 1.7 million bales last year.

The federation has procured 88.26 lakh quintals of cotton at the end of 1997-98 season and has paid a whopping Rs 17,01.47 crore comprising Rs 1,155.20 crore as support price and Rs 546.27 crore as bonus tofarmers. The federation has sold out 24.89 lakh bales cotton though there has been a balance of 9.96 lakh bales worth Rs 800 crore with it.

The state planning and finance departments have taken serious objection to the state government's decision to give bonus price along with the support price. The centre had announced a support price of Rs 1,400 crore and the state government had paid a bonus price of Rs 700 crore.

Pandurang Phundkar, the chief administrator of the federation said that the federation has exported 2 lakh bales of the total 2.75 lakh bales allotted by the centre for exports. The federation has earned foreign exchange worth Rs 170 crore.

Phundkar who later addressed the 13th annual general meeting hoped that the MPCS will get further extension though the centre has made it categorically clear that no further extension will be granted for the scheme. The centre has asked the state government to find out an alternative.