Raw jute crisis: Govt may have to spend Rs 2,000 cr more to procure bags

Raw jute prices going haywire in the ongoing 2020-21 season may put an additional burden of Rs 2000 crore on the govt exchequer for procuring environment-friendly jute bags for food grain packaging

Raw jute prices going haywire in

the ongoing 2020-21 season may put an additional burden of Rs 2000 crore on the government exchequer for procuring environment-friendly jute bags for food grain packaging, an official said.

The Centre and various agencies annually procure 10-12 lakh tons of jute bags valued at Rs 5,500 crore for packing food grain and sugar.

"With the rise in prices of raw jute, the government's additional spending on bags will be around Rs 2,000 crore in the current jute season," the official told PTI.

Raw jute prices have skyrocketed and once crossed Rs 8,000 per quintal, a rise of about 70-80 per cent since March last year. Later, an intervention by the West Bengal government had reduced the price to about Rs 6500 per quintal.

Raw jute price plays a crucial role in the government mechanism for bag pricing. The government normally allows three months average price of raw jute while computing the final bag pricing.

The country has been facing a shortage of the golden fibre and the Jute Commissioner's Office (JC) was of the view that exports, rather than less production, have led to the crisis.

According to its estimate, 5-7 lakh bales of raw jute could have been exported.

The final estimate of crop production was decided at 59 lakh bales for 2020-21.

Meanwhile, a meeting of the Expert Committee on Jute was held on May 4 but West Bengal government officials were not present there, sources said.

Indian Jute Mills Association (IJMA) in the meeting said that any interference of the JC at the cost of the industry will lead to further closure of mills.

The price rise and raw jute crisis have led to the closure of nine jute mills in the last three weeks, industry sources said.

Mills were suffering financially both due to rising prices and interference of the government, IJMA said.

Recently, the JC had reduced raw jute holding by mills to one month of average production, down from three months in the wake of the crisis.