Extension of Government Guarantee of Rs.1781 crore along with waiver of one percent guarantee fees to enable NAFED and CWC to undertake price support operations for procurement of oil seeds, pulses and cotton
The Cabinet Committee on Economic Affairs today approved the proposal of the Department of Agriculture & Cooperation for extension of government guarantee of Rs.1781 crore along with waiver of one percent guarantee fees to enable the National Agricultural Cooperative Marketing Federation of India Ltd. (NAFED) and Central Warehousing Corporation (CWC) [Rs. 1631 crore to NAFED and Rs. 150 crore to CWC along with waiver of one percent guarantee fees] to undertake price support operations for procurement of oil seeds, pulses and cotton. This will ensure remunerative prices to growers for their produce with a view to encourage higher investment in agriculture to achieve higher production.
The Government of India has been announcing the Minimum Support Price (MSP) for both Rabi and Kharif crops for more than three decades. Presently, 25 commodities namely, paddy, jowar, bajra, maize, ragi, wheat, gram, arhar (tur), moong, urad, masur (lentil), sugarcane, cotton, groundnut in shell, rapeseed/mustard, sunflower seed and nigerseed are covered under MSP.
This mechanism has been recognized as a tool to incentivize farmers and ensure sustained production of these commodities. NAFED requires working capital for procurement of oilseeds, pulses and cotton under Price Support Scheme (PSS). Since 2001, the same is provided through government guarantee of Rs. 1631 crore. Based on this, NAFED avails cash credit facility to the extent of Rs. 1631 crore from the State Bank of India.
However, after declaration of NAFED as an additional agency for procurement of cotton under PSS, additional working capital, over and above Rs. 1631 crore, is also being arranged for NAFED through letters of comfort with the approval of Ministry of Finance. Similarly, the CWC would also require working capital for procurement of oilseeds and pulses under PSS, and the same is to be provided through government guarantee of Rs. 150 crore.
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