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Rahul Wadke

Mumbai , June 6

THE Centre has agreed to subsidise export of cotton produced in Maharashtra by Rs 500 per bale, according to a State Government official.

The Government decision is expected to help the State to liquidate part of its cotton stocks of 30 lakh bales.

The subsidy is for transport of cotton from procurement centre to the nearest port of shipment. A notification to this effect is expected to be issued soon, the official said.

According to informed sources, the State Government would try to export 10 lakh bales of cotton in the current season.

The State marketing agency for cotton is expected to tap China for export of medium and short staple cotton, where there is good demand for these varieties.

However, cotton traders in the State do not see this development positively.

Mr Suresh Kotak, ex-President, East India Cotton Association, told Business Line that the logic behind the transport subsidy was difficult to understand given the fact that cotton has been procured at a much higher rate in Maharashtra than the minimum support price of Rs 1,760 per quintal.

"I believe that if subsidy is to be given in this manner then, private traders should also be given subsidy. After all we are also participants in nation building," Mr Kotak said.

In the cotton season of 2004-05, the Maharashtra Government through is nodal body, The Maharashtra State Co-operative Cotton Growers Marketing Federation (MSCCGMF), has procured 212 lakh quintals of cotton at a price of Rs 3,664 crore, under the Cotton Monopoly scheme .

The MSCCGMF since 1997 has not exported cotton, primarily due to global glut in cotton market.

However, the subsidy and the permission to exports would not be very high in monetary terms given the fact that the cotton monopoly scheme had been running into huge losses for the last 10 years.

The accumulated loss of the scheme is Rs 4,009 crore and this year, the loss is expected to be between Rs 1,600 crore and Rs 1,650 crore.

Under the scheme, started in 1971, the farmers are entitled for an assured price on selling their produce to the MSCCGMF and the bonus amount after the cotton bales are sold.

But from 1994-95, under political pressure, the bonus amount was announced before the start of the season and the payment was done in one or two instalments.

This had resulted in the scheme running into huge losses.

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Centre agrees to subsidise cotton export from Maharashtra

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