The government today decided to reimburse Rs 719.41 crore to the Cotton Corporation of India (CCI) for losses incurred while buying the fibre at minimum support price operations in the cotton season 2012-13.
The decision regarding this was taken by the Cabinet Committee on Economic Affairs (CCEA) yesterday.
"CCEA today approved reimbursement of losses amounting to Rs 719.41 crore to the CCI on Minimum Support Price (MSP) operations in the cotton season 2012-13," an official statement said.
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It said that CCI 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 interests of domestic users and producers.
The government under the Price Support System for the cotton season 2012-13 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.
The CCI 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.
"The CCI has successfully stabilised prices in Andhra Pradesh and avoided farmer distress with timely payments. Cotton prices then crossed MSP prices in March 2013 in Andhra Pradesh," it added.