The Government has decided to reimburse Rs 719.41 crore to Cotton Corporation of India for the losses incurred while buying the fibre at minimum support price operations during the cotton season 2012-13.
The decision was taken by the Cabinet Committee on Economic Affairs (CCEA) yesterday.
“CCEA today approved reimbursement of losses amounting to Rs 719.41 crore to Cotton Corporation on MSP operations in the cotton season 2012-13,” an official statement said.
It said that the corporation would be conducting domestic and export sales and the apportionment of these sales would be decided by an inter-ministerial committee consisting of representatives of the Ministries of Agriculture, Commerce, Textiles and the Department of Revenue, to strike an appropriate balance between the interests of domestic users and producers.
Under the price support system for the cotton season 2012-13, the Government fixed the MSP for long staple and medium staple varieties of raw cotton at Rs 3,900 per quintal and Rs 3,600/per quintal, respectively.
“This led to a hike in MSP price of 29 per cent and 18 per cent, respectively, over the previous year,” it said.
Cotton prices in Andhra Pradesh touched MSP prices in October 2012 and procurement under MSP operations commenced in the districts of Warangal, Guntur and Adilabad.
Cotton Corporation had procured 22.65 lakh bales of seed kapas under price stabilisation operations from October 2012 to February 2013 at a total cost of Rs 5,807.95 crore.
“CCI has successfully stabilised the prices in Andhra Pradesh and avoided farmers' distress with timely payments. Cotton prices then crossed MSP prices in March 2013 in Andhra Pradesh,” it added.