Interviews
Government policies impact cotton economy
12 May '09
4 min read
In actual practice, the benefit of the discount went to traders, that too a handful of large traders who bought cotton at cheap rates from CCI. CCI subsequently increased cotton prices substantially thereby helping cotton traders to obtain undue high prices from the mills.
Thus, the way the MSP operations were carried out have only helped traders to make undue profits at the expense of the mills. CCI had no justifiable reason to increase cotton prices after announcing a discount.
The highest discount was of Rs.650 per candy, the increase in base price after announcement of the discount exceeded Rs.2000 per candy. Thus, more than offsetting the discount introduced. The impression one gets is that MSP operations were carried out with the objective of helping cotton traders rather than the farmers or the textile industry.
It is reported that NAFED has also been allowed to provide discount on bulk purchases. The proper way of disposing of procured cotton by both CCI and NAFED would be either to sell at market price or provide a discount uniformly to buyers irrespective of quantities. By introducing discount on bulk purchases, NAFED would be repeating the unwise measure that CCI had adopted earlier.
CCI has by now disposed of most of the cotton they had procured whereas NAFED have been able to dispose of very small quantity so far. Therefore, it is important that NAFED operates whatever discount they want to introduce in such a way that all purchasers get the benefit rather than large traders.
Thus, the way the MSP operations were carried out have only helped traders to make undue profits at the expense of the mills. CCI had no justifiable reason to increase cotton prices after announcing a discount.
The highest discount was of Rs.650 per candy, the increase in base price after announcement of the discount exceeded Rs.2000 per candy. Thus, more than offsetting the discount introduced. The impression one gets is that MSP operations were carried out with the objective of helping cotton traders rather than the farmers or the textile industry.
It is reported that NAFED has also been allowed to provide discount on bulk purchases. The proper way of disposing of procured cotton by both CCI and NAFED would be either to sell at market price or provide a discount uniformly to buyers irrespective of quantities. By introducing discount on bulk purchases, NAFED would be repeating the unwise measure that CCI had adopted earlier.
CCI has by now disposed of most of the cotton they had procured whereas NAFED have been able to dispose of very small quantity so far. Therefore, it is important that NAFED operates whatever discount they want to introduce in such a way that all purchasers get the benefit rather than large traders.
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