The textile ministry has sought Rs 1,660 crore for Cotton Corporation of India (CCI) to meet its Minimum Support Price (MSP) obligations.
?A proposal has already been forwarded to finance minister Pranab Mukherji who has reacted positively,?? secretary textile Rita Menon told FE on Wednesday
She further said, ?The MSP of medium and long staple cotton were raised by 40% during cotton season October-September 2008-09 as compared to previous year. Due to such a high increase, there was a substantial procurement of cotton by government agency that suffered heavy losses worth Rs 3,000 crore by selling the commodity below purchase price due to slackening demand from the textile mills.
The initiative has been taken as the government is operating the MSP scheme through CCI.
By May CCI had purchased 90 lakh bales (170 kg) level. Of this 60.76 lakh bales have been offloaded in the domestic market incurring a loss of about Rs 2,200 crore. This month the losses have further risen to Rs 3,000 crore.
The agency had fixed the procurement targets at 110 lakh bales at MSP announced for 2008-09.
Besides, it has exported 14,752 bales that too below floor price.
With the commodity being sold below MSP, CCI and Nafed have been making purchases at Rs 22,500 per candy in crop year 2008-09, despite softening of prices in the international prices.
The CCI is still under pressure to bring prices down to around Rs 20,000 per candy at par with current international rates.