Raw jute crisis Govt may have to spend Rs 2 000cr more to procure bags

    Kolkata, May 9 (PTI) Raw jute prices going haywire in
the ongoing 2020-21 season may put an additional burden of Rs
2000 crore on the government exchequer for procuring
environment-friendly jute bags for food grain packaging, an
official said.
    The Centre and various agencies annually procure 10-12
lakh tons of jute bags valued at Rs 5,500 crore for packing
food grain and sugar.
    "With the rise in prices of raw jute, the government's
additional spending on bags will be around Rs 2,000 crore in
the current jute season," the official told PTI.
    Raw jute prices have skyrocketed and once crossed Rs
8,000 per quintal, a rise of about 70-80 per cent since March
last year. Later, an intervention by the West Bengal
government had reduced the price to about Rs 6500 per quintal.
    Raw jute price plays a crucial role in the government
mechanism for bag pricing. The government normally allows
three months average price of raw jute while computing the
final bag pricing.
    The country has been facing a shortage of the golden
fibre and the Jute Commissioner's Office (JC) was of the view
that exports, rather than less production, have led to the
    According to its estimate, 5-7 lakh bales of raw jute
could have been exported.
    The final estimate of crop production was decided at
59 lakh bales for 2020-21.
    Meanwhile, a meeting of the Expert Committee on Jute
was held on May 4 but West Bengal government officials were
not present there, sources said.
    Indian Jute Mills Association (IJMA) in the meeting
said that any interference of the JC at the cost of the
industry will lead to further closure of mills.
The price rise and raw jute crisis have led to the
closure of nine jute mills in the last three weeks, industry
sources said.
    Mills were suffering financially both due to rising
prices and interference of the government, IJMA said.
    Recently, the JC had reduced raw jute holding by mills
to one month of average production, down from three months in
the wake of the crisis. PTI BSM

(This story has not been edited by THE WEEK and is auto-generated from PTI)