The government today allocated Rs 1,473 crore to the Cotton Corporation of India (CCI) for losses incurred due to procurement of cotton at the minimum support price (MSP) from the farmers.
"The implementation of the decision will not only ensure remunerative returns to the cotton growers without quantitative restriction and devoid of exclusion but will also enable the CCI for smooth conduct of MSO operations during the cotton season 2008-09," Information and Broadcasting Minister Ambika Soni said.
The decision will also enable the Corporation to meet anticipated losses on procurement of raw cotton from the farmers, Soni said after the Cabinet meeting here.
CCI has procured about 90 lakh bales of cotton (one bale is equal to 170 kg) in the 2008-09 and expects to buy approximately the same amount in the current season.
The procurement agency is compensated by the government against losses incurred for purchasing at the price fixed by the government.
CCI buys cotton on behalf of the government at the MSP and then offloads it at the market price within India and in global markets.
In 2007-08, the corporation had bought only 27.5 lakh bales. To increase procurement in 2008-09, the government increased the MSP for standard cotton (long staple) to Rs 3,000 per quintal from Rs 2,030 in the previous year. The MSP of medium staple cotton was raised to Rs 2,500 from Rs 1,800 per quintal.