The centre is planning to introduce Direct Payment Deficiency System (DPDS) as a pilot project at Hinganghat in Wardha district of Maharashtra, to help cotton farmers get directly the amount which is the difference between the MSP and market price, if the market price goes below the MSP, textile commissioner Kavita Gupta said in Mumbai.
If the pilot is successful, the DPDS will be rolled out in all cotton-growing regions. The Agricultural Produce Marketing Corporation (APMC) price will be taken as the market price under the system, she said.
So far, the government used to buy cotton by paying the MSP of Rs 3,750 per quintal but that often created artificial short supply in market. It also incurred huge cost on interest and storage of the procured stock.
Under the DPDS, the farmers will have to submit documents like a copy of APMC receipt, land records and estimated farm yield to avail the benefit.
In the last season that ended in October 2015, the Cotton Corporation of India procured 86 lakh bales of cotton across the country. But cotton procurement this year is likely to be lower than last year due to firm prices, which are ruling above the MSP.