|
Cotton has been in the news, quite prominently, of
course, for wrong reasons. According to the industry sources, there has
been runaway increase in cotton prices and the textile sector is on the verge
of collapse because of the crisis it faces on account of steep rise in cotton
prices, which shot up by 35% during the last one year, aggravated by
disappearance of cotton from the market because of speculative operations of
international traders.
|
According to P. D. Patodia, Chairman of Confederation of
Indian Textile Industry, "The textile and clothing industry is gong
through a serious crisis because spiralling increase in cotton prices and
unabated increase in prices of cotton, will be deleterious to the economy in
general and the textile sector in particular, which has already eroded its
exports competitiveness on account of appreciating rupee. The serious of onslaughts
being faced by the industry will cripple its growth and employment generation
potential."
Recently, CITI had organized a press meet to highlight the
plight of Indian textile mills, in which I also participated. It was addressed
by a number of functionaries as also office bearers of South India Mills
Association. It was pointed out that some of the mills have already closed down
while others are on their way to closure. It is understood that the steep rise
in cotton prices has brought 20 mills to closure in the last six months. These
bills, which boasted of a capacity of 25,000 spindles and above, had more than
20,000 employees, who have been rendered jobless. These mills included Ashok
Textiles, Chakola Spindles, Western India Cotton Mills, Vanaja Textiles, Sri
Bhagavathi Textiles, Rajgopal Textiles as well as Madras Spinners.
Why have we reached the crisis level?
There are a number of factors at work. These are primarily
the short availability of cotton, high interest cost, and above all, the
unbridled cotton trading by international players.
Short Availability of Cotton
|
If one were to ask the Government today as to what
is level of actual exports of cotton or their country-wise details or what
quantity and/or value worth of export contracts have been signed or
committed, it will be difficult for the Government to give any figures, not
to speak of official, authoritative figures. At best, the Government can
possibly give out some "estimates".
|
There is an apparent short availability of cotton in the
market today. It might generally be presumed that it is because of lower
productivity levels of Indian cotton production or lower overall production of
cotton in the country. It is true that all-India per hectare yield is estimated
at 553 kgs. Per hectare for 2007-09, which is a positive improvement over 520
kgs. per hectare in a year before. Yet it is much lower than the world average
of 765 kgs. per hectare. In spite of our having the highest total area under
cotton cultivation in the world, we are still number two in our total
production.
However, in term of actual production of cotton, we are not
that badly placed. In fact, this year we expect a total crop of 315 lakh bales
(each of 170 kgs. each), which was only 244 lakh bales in 2005-06 and 270 lakh
bales in 2006-07. Of course, the industry needs some 278 lakh bales, which
should have been more than enough for the industry to meet its requirement. The
chart below traces the progress of cotton economy: