Cabinet approves incurring expenditure for reimbursing the losses under MSP operations for cotton during the cotton season (October to September) 2014-15 to 2020-21

Cabinet approves price support of ₹ 17,408.85 crore to the Cotton Corporation of India (CCI) for the cotton seasons from 2014-15 to 2020-21

The Cabinet Committee on Economic Affairs chaired by Prime Minister, Shri Narendra Modi, has given its approval for committed price support of ₹ 17,408.85 crore to the Cotton Corporation of India (CCI) for the cotton seasons from 2014-15 to 2020-21 (upto 30.09.2021).

In order to safeguard the interests of the cotton farmers, it is expedient to conduct price support operations in cotton years 2014-15 to 2020-21 as cotton prices touched the MSP prices.  Its implementation enhances the inclusiveness of the cotton farmers in the economic activity of the country.  Price support operations help stabilize the cotton prices and alleviate farmer’s distress.

Cotton is one of the most important cash crops and plays a major role in sustaining livelihood of around 58 lakh cotton farmers and 400 to 500 lakh people engaged in related activities such as cotton processing and trade.

During cotton season 202-21, area under cotton cultivation was 133 lakh hectares with estimated production of 360 lakh bales, which account for around 25% of total global cotton production.  Government of India based on the recommendations of CACP fixes MSP for seed cotton (kapas).

Government of India appoints CCI as Central Nodal agency and CCI is mandated to undertake MSP in cotton by procuring all FAQ grade cotton from farmers without any quantitative celling, as and when cotton prices fall below MSP level.  MSP operations protect cotton farmers from distress sale during any adverse price situation.

MSP operations being sovereign function in nature motivates cotton farmers in the country to keep their sustained interest in cotton cultivation so as to make India Atambirbhar for quality cotton which is a raw material for spinning industry.  CCI keep its infrastructure ready in all 11 major cotton growing States by opening 474 procurement centres in 143 districts.

During global pandemic in the last two cotton seasons (2019-20 and 2020-21), CCI procured around 1/3rd of the cotton production in the country i.e. about 200 lakh bales and disbursed more than ₹ 55,000/- crore directly in the bank accounts of around 40 lakh farmers.

For current cotton season i.e. 2021-022, CCI has already made all adequate arrangements in all 11 major cotton growing states including deployment of man power at more than 450 procurement centres, so as to meet any eventuality of MSP operations.

Price support for cotton to reimburse MSP procurement losses, stabilizing market prices and protecting farmers. Cabinet authorizes expenditure to reimburse losses under MSP operations for cotton for the 2014-15 to 2020-21 seasons, providing committed price support to the central procurement agency to carry out procurement when market prices fall to MSP levels, with procurement mandated for FAQ grade cotton without quantitative ceilings and supported by nationwide infrastructure and arrangements.