The government today said it may extend a bailout package to the cotton industry to tackle the rising input costs, but firmly ruled out rolling back the “sharp hike” in the minimum support price (MSP) of cotton.
“There is no question of taking it back (MSP). The farmers should get their due. But we will talk to the industry and see if we can do something... Maybe a bailout package for them,” Union Agriculture Secretary T Nanda Kumar said on the sidelines of an exhibition here, organised by the Confederation of Indian Industry.
Nanda Kumar, however, refrained from commenting on the nature of the package. The Centre had in September increased the MSP of standard cotton (long staple) to Rs 3,000 a quintal for 2008-09 from Rs 2,030 the previous year. The MSP of medium staple cotton has been raised to Rs 2,500 from Rs 1,800 a quintal.
The industry protested strongly against the MSP hike, saying domestic rates will skyrocket at a time when prices in the global markets are declining. The move was termed by political analysts a “farmer friendly move” in the run-up to general elections next year.
The Confederation of Indian Textile Industry has already cautioned that the hike in MSP will prompt domestic traders and millers to scout for alternative avenues for importing cheaper cotton and exports may plunge by a half to about 50 lakh bales in 2008-09 from 100 lakh bales last year. Some traders have started importing cheaper cotton from Pakistan. India is projected to produce at least 320 lakh bales of cotton in the 2008-09 season.
The Centre is also unlikely to announce the MSP for rabi crops, mainly wheat, before the state polls, as the issue is pending with the Election Commission (EC) for a green signal. “We are waiting for EC’s clearance. The issue will go to the Cabinet after the clearance, maybe after the polls,” the agriculture secretary said.
