The Maharashtra Cabinet on Wednesday decided to stand guarantee to the ₹1500 crore loan, which will be raised by Maharashtra State Co-operative Cotton Growers Marketing Federation Ltd for paying minimum support price (MSP) to the cotton growing farmers in Maharashtra. The loan would be raised from Bank of Maharashtra with an interest rate of 6.35 per cent, a press statement issued by the Chief Minister of Maharashtra's office said.
The statement said that in addition, the guarantee fee to be paid to the Cotton Marketing Federation on the sanctioned government guarantee has also been waived. Due to satisfactory rainfall and favourable weather conditions in the state, 400 lakh quintals of cotton is expected to be produced this season.
Due to lower international cotton prices, lower open market cotton prices and increase in guaranteed prices by the central government, the State Co-operative Cotton Growers Marketing Federation will have to procure more cotton at guaranteed prices this season than last season, the statement added.