Chandan Kishore Kant / Mumbai August 22, 2008, 5:32 IST The government is likely to increase the minimum support price (MSP) of cotton by 40 per cent or more for the cotton year 2008-09, according to official sources. At a time when inflation has touched 12.63 per cent for the week ended August 9, such a measure may spell trouble for the $45-billion domestic textile industry. Senior officials in the Ministry of Textiles told Business Standard that the prices of medium long stable cotton is likely to be increased to Rs 2,500 a quintal from the current MSP of 1,900 a quintal. POLICY PUSH Month-wise cotton prices Rs/candy Period J-34 Shankar-6 2006 - 07 2007 - 08 2006 - 07 2007 - 08 October 16,000 17,800 18,400 20,000 November 15,400 18,400 17,900 19,600 December NA 18,800 NA 20,100 January 15,400 19,400 18,000 21,000 February NA 20,200 NA 22,100 March NA 20,200 NA 22,100 April 17,900 20,600 18,600 22,600 May 18,600 24,400 19,300 24,500 June 18,700 26,600 19,300 27,300 July 19,500 27,400 20,400 28,300 Note: 1 Candy = 356 kg Source : Cotton Corporation of India Similarly, the prices of long stable cotton is expected to be raised to Rs 3,000 a quintal, which currently rules at Rs 2,030. The official added that though these prices would have seemed too high three months ago, the MSP would still be less taking into account the present rates of cotton (Shankar-6). Since the beginning of the current cotton year (October-September), the prices of Shankar-6 variety of cotton have increased from Rs 20,000 a candy (1 candy=356 kg) in October to Rs 28,300 a candy in July, up 41.5 per cent. The Commission for Agricultural Costs and Prices (CACP) recommends MSP for two basic varieties of raw cotton of fair-average quality. While on is the medium long staple length group of 25 mm-27 mm of the variety F414/H-777/J-34, the other is the long staple group of 27.5 mm-32 mm which is of the variety H-4. While deciding the MSP, the cost of production and a reasonable margin of profits for cotton growers are taken into account. The country produced 31.5 million bales (1 bale=170 kg) in 2007-08 against 28 million bales in 2006-07. However, due to a fall in acreage in the US and higher global demand, cotton exports from the country exceeded the target of 8.5 million bales and went ahead 10 million bales. This had its impact on the cotton prices which shot up to historical highs in the current cotton year.