According to the East India Cotton Association (EICA), mill offtake of cotton in 1997-98 had plunged to 143.25 lakh bales from 150.41 lakh bales of 170 kg each in the earlier season.

In the current season, the Coton Advisory Board which met on Novembe 19, 1998 had predicted that mill consumption of cotton in the 1998-99 season would be 144 lakh bales. Recently, the meeting of the All India Cotton Trade Associations (AICTA) unfortunately endorsed this estimate which looks inflated in the light of reduced monthly rate of cotton consumption by the mill sector for which AICTA itself made available the figures on January 3, 1999.

According to these statistics, cotton offtake by the mill sector in the fist four months of 1997-98 remained well above 12.50 lakh bales per month, with a monthly average of 12.87 lakh bales for theperiod. In the subsequent eight months, however, the monthly offtake by that sector remained well below 11.50 lakh bales per month, with a monthly average of 11.46 lakh bales. Unless there was some tangible proof of any increase in the offtake in the early months of the current season it might be imprudent to make any estimate at a level higher than about 138 lakh bales as indicated by the average of past eight months.

Though about five months of the current season are over, provisional figures of mill cotton consumption are available only for the first two months of 1998-99. They indicate that the mill-offtake was around 11.44 lakh bales in September 1998 and 11.52 lakh bales the subsequent month. Both these figures showed that there was yet no real improvement in cotton offtake by the mill sector.

Normally, the EICA is very meticulous in arriving at its estimates of cotton crop in the country. One cannot therefore avoid, a feeling that it accepted without proper application of its own mind, the millconsumption estimate of 144 lakh bales for the current season that was earlier given out by the CAB, tough the present trend in this regard could not be substantiated.

If the mill consumption of cotton has remained subdued during the last several months, the reasons are not far to seek. At the end of March 1998, nearly 127 spinning mills in the country were closed. In the subsequent seven months, 63 more mills had downed their shutters, indicating closure of around nine spinning mills on an average each month.

Besides, five composite mills had closed down since March 1998. And there were no indications that this process had come to a halt now. The closure of textile mills, particularly of large number of spinning units, was due to the fact that the overseas market for cotton yarn was bad with the result that exports of such yarn were down not only in terms of the volume but also in terms of price realisations.

Secondly, the domestic market for cotton yarn remained far from encouraging as the weavingunits both in the organised an decentralised sectors found it difficult to sell their fabrics. If the demand for cloth picks up that can provide some relief to spinners and weavers and there can be increase in the offtake of cotton by the mill sector. Trade circles do find this happening so far, though every one is hoping for it. While the inflow of duty free imports is continuing to flood the domestic market, the cotton industry seems to be heading for an unprecedented end season stock of more than 40 lakh bales of domestic cotton.