Press Information Bureau

Government of India

Cabinet Committee on Economic Affairs (CCEA)

07-December-2011 20:45 IST

The Cabinet Committee on Economic Affairs today approved the following:

(a) To provide subsidy to Jute Corporation of India on continuous basis to off-set the losses on account of MSP operations. The quantum of subsidy will include the difference between the expenditure incurred on MSP raw jute upto the point of sale and sale price of MSP raw jute. The reimbursement of fixed overhead cost would be maintained at a level of Rs.55 crore from the jute year 2011-12. It will be granted every year as preparedness expenses for conducting MSP operation, therefore, to be paid even for those years when there is no MSP operation.

(b) To regularise the subsidy given to Jute Corporation of India during 2009-10 and 2010-11 (Rs.36.59 crore and Rs.30crore respectively) and release the balance amount due for 2010-11 (Rs.6.59 crore) to make it at the same level as that of the previous years.

(c) To provide one-time government guarantee upto Rs.150 crore along with accrued interest, as applicable, for 10 years with effect from the financial year 2011-12 to public sector banks for availing of working capital loan facility as and when required by the Jute Corporation of India Ltd. for conducting the MSP operations.

This decision will provide financial support to Jute Corporation of India to protect the interest of the jute growers through procurement of raw jute under the MSP fixed by the Government of India and also to stabilize the raw jute market for the benefit of the 40 lakh farm families and the jute economy as a whole.

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SH/SKS

Subsidy support for MSP operations ensures reimbursement of losses and preparedness funding with government working capital guarantee. Approval to provide continuing subsidy to the Jute Corporation of India to offset losses from MSP operations, including reimbursement of the expenditure to sale price gap and maintenance of fixed overhead reimbursement as annual preparedness expenses payable even in non procurement years; regularisation and release of past subsidy balances; and a one time government guarantee to enable public sector banks to extend working capital loans to the Corporation for MSP procurement.