The jute industry, however, has more sticky issues to grapple with such as lacklustre market prices of raw jute and consistently falling area under cultivation.
"For most part of the last financial year, market prices of raw jute ruled below the MSP. Of late, prices have squared up. The other worry for the industry is declining acreage and slump in raw jute production”, said an industry source.
According to government data, area under jute cultivation has seen a marked decline between 2012-13 and 2017-18 from 756,ooo hectares to 684,300 hectares. Over the comparable period, raw jute production has fallen from 11 million bales to 9.83 million bales (one bale is 180 kg).
Jute production is concentrated in the states of West Bengal, Bihar and Assam. In terms of area, West Bengal accounts for 76 per cent of the cultivated area (in 2016-17) followed by Bihar (13 per cent) and Assam (11 per cent). On raw jute production too, West Bengal is the leader, contributing 78 per cent to the total output followed by Bihar (14 per cent) and Assam (8 per cent).
Raw jute is one of the commodities covered under the Wholesale Price Index (WPI). It has a weightage of 0.545 in the WPI with 2011-12 as the base year.
The financial implications of the increase in MSP of raw jute would hinge on the quality of its procurement. The procurement of raw jute, in turn, would depend on market prices.