Maharashtra Govt Offers Guarantee To Mahafed's Rs 1,000 Cr Loan

Trade & Policy

Maharashtra Govt Offers Guarantee To Mahafed's Rs 1,000 Cr Loan

In a major decision that will help clear the cotton procurement dues of farmers, the Maharashtra State Cabinet gave a nod to offering government guarantee to additional loan of Rs 1,000 crore, obtained by Maharashtra State Co-operative Cotton Growers Marketing Federation. According to Anantrao Deshmukh, Chairman of the Cotton Federation, the federation had taken a loan of Rs 2,300 crore previously to make payment to farmers for cotton procured from them. At that time, the state government had given a guarantee for Rs 1,800 crore of the loan amount. "Recently, we have obtained additional loan of Rs 1,000 crore. Thus, the total loan obtained by the Cotton Federation for clearing dues of farmers is Rs 3,300 crore. We had sought government guarantee for a total of Rs 1,500 crore. However, the state cabinet has cleared government guarantee for Rs 1,000 crore only," he said. Besides, the State Cabinet also decided to waive guarantee charges applicable for the new guarantee. Interestingly, as per the official press release, already, the state has given government guarantee to a loan of Rs 1,800 crore obtained by the Cotton Federation for payment to farmers. According to Deshmukh, the Cotton Federation had exhausted its funds and hence had obtained additional loan. The loan was raised as the Cotton Federation had to pay the farmers within seven days of procurement. Graders warn of stir Anantrao Deshmukh, Chairman of the Cotton Federation, attracted the attention to another issue as well. Graders' Association had resorted to a day's 'no work' agitation last week, and had warned to go on indefinite strike from June 30 if the government did not meet their demand, he said. According to Deshmukh, despite start of monsoon season the Cotton Federation was forced to procure cotton from farmers. The graders were complaining of pressure on them to procure even the wet and sub-standard quality of cotton, he said. "Such forced procurement of wet and sub-standard quality of cotton would cause loss to the government. The graders and officials involved are afraid that they would be held responsible for this loss at a later stage. Hence, they want assurance from the government that they would not be held responsible for loss arising out of forced procurement of wet cotton," he said. If their demands are not met, the graders and officials have threatened to go on indefinite strike from June 30, he added.