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Jute prices go out of control

Jute prices are rising in India. Jute is one of the cheapest items India produces. But the jute industry is facing huge losses and a fall in production due to floods in West Bengal last year. Raw jute prices have already touched an unprecedented high of Rs 54,000 a ton, twice the level of Rs 27,000 per ton in the year-ago period. It is feared that raw jute prices may reach the level of Rs 60,000 a ton.

With jute products having become costlier, their prices may shoot up further as the Center is contemplating a decrease in subsidy on the golden fiber. Due to the current steep hike in price of raw jute, the price of jute bags has also increased, resulting in a higher burden of subsidy to be given by the central government for purchase of jute bags.

Even after the drive by West Bengal for de-hoarding of raw jute stock, prices have further increased since November 2015. In order to check the possible price rise of jute bags and reduce the burden of subsidy on the Central government, prices of raw jute bags may be capped at the level of average price of November 2015.