The Maharashtra government will be the guarantor for a ₹1,500-crore bank loan taken by the State Cooperative Cotton Growers Marketing Federation from the Bank of Maharashtra to pay farmers for procuring their produce at minimum support price (MSP). The decision was arrived at during the weekly cabinet meeting chaired by chief minister Uddhav Thackeray.
The federation has taken the loan at 6.35 per cent annual interest rate. The state government has also waived the guarantee fee to be charged from the federation for the loan, a statement from the chief minister’s office said.
The statement said the central government has announced an MSP of ₹5,825 per quintal for long staple cotton and ₹5,515 for medium staple cotton for the 2020-21 Kharif season.
Due to satisfactory monsoon in 2020 and favourable weather conditions, production of 400 lakh quintal of cotton is expected in the state, it said.
Cotton prices have come down in international market and also in the open market, and the Centre has increased the MSP, a news agency reported citing the statement.
Cotton procurement this year in Maharashtra is expected to be more than what it was the last season, it added.