Centre to bear higher subsidy for procuring jute bags this Kharif season

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November 13, 2020 4:30 AM

The Jute mills, generally keeping there months of raw jute stock, have committed supplying bags equivalent to 14 lakh jute bales against an indent of 24 lakh jute bales for the Kharif season.

The JCI, given the price situation, has sought police help from the chief secretaries of the jute growing states of West Bengal, Bihar, Assam and Tripura to embark on random inspection for enhanced regulation of the raw jute market.The JC's office also intended to put a cap on the prices of raw jute disallowing the market forces to work.

The Centre will have to pay a higher subsidy for procuring jute bags this Kharif season, with the Jute Corporation of India (JCI) referred price of raw jute touching up to Rs 6,025 per quintal, increasing cost per bag by up to 53.

Kousik Chakraborty, deputy jute commissioner, JCI told Financial Express, every 100 bags cost `5,344 with raw jute’s reference price accounting for 60% of a bag’s price component.

Though in the first place, the state governments have to buy the jute bags, the central agencies like the Food Corporation of India (FCI) reimburse 100% of the expenditure incurred by the states in procuring the bags.

The raw jute price increase is a fall out of price rigging by a section of middlemen pushing up the subsidy burden on the Centre. Farmers by no means have been benefitted by the price rise prompting the JCI to exercise its power of strictly regulating the jute market through capping prices and restricting stock quantum. “The JCI is also mulling to prepare a list of who can stock jute and who cannot, violating which would attract penal action under section 7 of the Essential Commodity Act,” Chakraborty said.

JCI had last month ordered the traders to bring down raw jute stocks to up to 1,500 quintal but has further decreased it to up to 500 quintal, also to be made be applicable for jute mills, currently supplying bags equivalent to 2 lakh bales per month against their capacity of 3 lakh bales per month. Every jute bale makes 500 sacks.

The Jute mills, generally keeping there months of raw jute stock, have committed supplying bags equivalent to 14 lakh jute bales against an indent of 24 lakh jute bales for the Kharif season. But so far, the mills have supplied 9 lakh bales equivalent of sacks, which creates doubt whether they would be able to supply their committed quantity, Chakraborty said.

The JCI, given the price situation, has sought police help from the chief secretaries of the jute growing states of West Bengal, Bihar, Assam and Tripura to embark on random inspection for enhanced regulation of the raw jute market.

The Jute Balers Association has however protested on the stock limit, saying that prices have risen because of low production this crop season. Jute prices at present are below Rs 5,900 per quintal and production has been to the tune of 60 lakh bales this crop season against last season’s 80 lakh bales. But the JCI is of the view that the last year’s carry overstock of 18 lakh bales leaves enough quantity for the market to keep prices under control.

” If the price continues to rise artificially, we will have to cap on the market prices of raw jute,” Chakraborty said. The government has fixed raw jute MSP at 4,225 per quintal for FY 21.

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