Maharashtra cotton procurement bill to shoot up by Rs 600 crore

The cash-strapped Maharashtra treasury is faced with the daunting task of honouring its budgeted expenditure and clearing bills totalling nearly Rs 1,800 crore, presented by various government departments, even as it seeks to finance its monopoly cotton procurement scheme which is expected to cost an additional Rs 600 crore this fiscal.

According to well-placed secretariat officials, the minimum support price has been raised from Rs 1,960 per quintal of cotton to Rs 2,500 per quintal (a pre-poll promise made by the Sushilkumar Shinde-led Democratic Front government).

A bumper cotton crop this year would lead to at least Rs 2,000 crore being required by the Cotton Federation to procure the commodity from state agriculturists under the cotton monopoly procurement scheme.

Had the state government stuck to the minimum support price of Rs 1,960 per quintal announced by the Union government, it would have to spend around Rs 600 crore less.

Now, with the state offering a much higher price, farmers have begun to converge enmasse at government centres with balefuls of cotton shunning private ginning and spinning mills that offer a much lower price.

In addition, the Maharashtra State Cooperative Bank (MSCB) would be averse to financing the federation with the requisite funds to buy out the farmers' produce till it has repaid the Rs 443 crore owed by it for earlier purchases under the scheme.

The state government has initiated desperate revenue mobilisation measures aimed at increasing the state government revenue additionally by Rs 2,000 crore in the last quarter as well as Rs 3,000 crore through market borrowings to tide over the looming fiscal crisis.

The fiscal situation has worsened by a spate of payments accruing on account of the pre-poll sops such as Rs 809 crore already paid to the Maharashtra State Electricity Board (MSEB) for the two quarters between July and December for free power sop for 23 lakh farmers.

If the state government were to fulfill all its 77 pre-poll promises, it would require to additionally mobilise a sum close to Rs 5,000 crore, besides the committed expenditure it has already budgetted for.