Sena-BJP Govt’s policies hits cotton monopoly scheme hard

The objective of introducing the scheme in Maharashtra, about a quarter of a century back, was to protect the growers of `white gold’ from exploitation by private traders. Earlier, the agents of these traders struck deals with the farmers at ridiculous prices.

After the scheme was introduced, not only were the farmers assured of a fair and uniform price for their entire crop but they also had the facility of carting their stocks only as far as the nearest procurement centre of the cotton marketing federation.

Each year the State Government would announce a procurement price which was slightly less than the market price but substantially higher than the Central Government’s support price. The difference between the two price levels was paid as `advance bonus’ to the farmers.

This worked well for many years and the farmers grew accustomed to the stability offered by the monopoly scheme. The Government always took care to watch the open market trends, price fluctuations, weather and crop patterns and other factors before announcing the procurement price each year.

Of course, political considerations were also heavy because the farmers constituted a huge vote bank particularly in Vidarbha and Marathwada regions. However, when the Sena-BJP alliance took the reins of Maharashtra in 1995, all it seemed to care for was playing to the gallery. Right from the beginning, Manohar Joshi and his men displayed a marked indifference to applying their minds to the issue of cotton purchase. Time and again they were exposed for this in the legislature and outside.

Throwing all practical considerations into the waste-bin, the Sena-BJP Government, in its first year, announced a price of Rs 2,100 per quintal purely out of political expediency. The open market prices were much lower and the federation was saddled with huge stocks which it had bought for higher prices than it could sell.

Once the price reached that level, it could not be brought down irrespective of the losses which were piling up. To make matters worse, in this the election year, the Sena-BJP government hiked the procurement price further to Rs 2,300 per quintal.

Globally the prices of cotton have gone down affecting the markets in India as well. Moreover, the bumper crop this year has put the federation in the fix. Because it’s a monopoly scheme the federation is committed to purchasing all the cotton that the farmers produce. That coupled with the plummeting prices has created the frightening prospect for the federation of facing a loss as huge as Rs 800 crore in the current season alone.

Even if the Central Government were to ban cotton imports, which seems a remote possibility, the textile industry will feed itself from the cotton available from other states and from the Cotton Corporation of India (CCI) at prices much lower than Maharashtra’s.

The State Government’s borrowings for the cotton federation and the accumulated losses have reached the level when loans from the state cooperative bank and NABARD put together are not enough to fund the scheme. It is now having to borrow from urban cooperative banks and other institutions as well.

But looking at the current year’s projected loss, it seems unlikely that the Centre will grant an extension to Maharashtra’s monopoly cotton purchase scheme for the year 2000-2001.