"... In PAGE 30: ....3 percent in Scenario 2 to 5.8 percent in Scenario 3. Average benefits to the cotton sector are summarized by sector actor (producer, consumer, and innovator) and country in Table7 . The main conclusion is that there are significant differences among countries in terms of the overall magnitude of economic benefits.... In PAGE 30: ... The main conclusion is that there are significant differences among countries in terms of the overall magnitude of economic benefits. Between Scenarios 2 and 3, there is little change in terms of either average numbers or the risk profile for consumers in Senegal ( Table7 and Figure 12). As this is a very important strategy for study countries in West Africa, we conducted a regression in @Risk to examine the sensitivity of these results to the assumptions that underlay the structural model.... ..."

"... In PAGE 31: ... In comparison to Scenario 4 both, a reduction in consumer surplus and a increase in surplus earned by innovators are observed. Average results by country and actor are shown in Table9 . Examination of the probability distributions of producer surplus confirms that in this model, the risk of negative producer surplus induced by external shocks that affect adoption can be as high as 40 percent in Mali and Benin.... ..."

"... In PAGE 4: ...iv LIST OF TABLES Table 1: World Cotton Export Market 1 Table 2: India apos;s Share and Ranking in the World Cotton and Textile Markets 2 Table 3: Average Daily Wage Comparison Among Sectors 5 Table 4: Market Share of Cotton Traders by Ownership 7 Table 5: Movement in Price Indices 16 Table6 : Yield Growth of Cotton 17 Table 7: Production and Average Yield of Cotton in the World 18 Table 8: Staple-wise Cotton Consumption and Count-wise Yarn Production 20 Table 9: Official and Trade Estimates of Cotton Production 22 Table 10: Trends of Cotton Exports 23 Table 11: Initial Values 33 Table 12: Price Elasticities 34 Table 13: Net Income Changes Without Compensation 37 Table 14: Net Income Changes With Compensation (Tax Exemption for Weavers) 39 Table 15: Net Income Changes With Compensation (No Tax / Producer Subsidies) 39 Table 16: Changes in Export Values 40 Table 17: Changes in Government Revenue - Tax Exemption for Weavers 41 Table 18: Changes in Government Revenue - Producer Subsidy for Weavers 41 Table 19: Gainers and Losers Under Different Liberalization Policies 44 Table 20: Short-term and Long-term Elasticities 51 Table 21: Different Set of Elasticities for Sensitivity Analysis 58 Table 22: Results of the Sensitivity Analysis Under Different Sets of Elasticities 59 ... ..."

"... In PAGE 4: ...iv LIST OF TABLES Table1 : World Cotton Export Market 1 Table 2: India apos;s Share and Ranking in the World Cotton and Textile Markets 2 Table 3: Average Daily Wage Comparison Among Sectors 5 Table 4: Market Share of Cotton Traders by Ownership 7 Table 5: Movement in Price Indices 16 Table 6: Yield Growth of Cotton 17 Table 7: Production and Average Yield of Cotton in the World 18 Table 8: Staple-wise Cotton Consumption and Count-wise Yarn Production 20 Table 9: Official and Trade Estimates of Cotton Production 22 Table 10: Trends of Cotton Exports 23 Table 11: Initial Values 33 Table 12: Price Elasticities 34 Table 13: Net Income Changes Without Compensation 37 Table 14: Net Income Changes With Compensation (Tax Exemption for Weavers) 39 Table 15: Net Income Changes With Compensation (No Tax / Producer Subsidies) 39 Table 16: Changes in Export Values 40 Table 17: Changes in Government Revenue - Tax Exemption for Weavers 41 Table 18: Changes in Government Revenue - Producer Subsidy for Weavers 41 Table 19: Gainers and Losers Under Different Liberalization Policies 44 Table 20: Short-term and Long-term Elasticities 51 Table 21: Different Set of Elasticities for Sensitivity Analysis 58 Table 22: Results of the Sensitivity Analysis Under Different Sets of Elasticities 59 ... In PAGE 4: ...iv LIST OF TABLES Table 1: World Cotton Export Market 1 Table 2: India apos;s Share and Ranking in the World Cotton and Textile Markets 2 Table 3: Average Daily Wage Comparison Among Sectors 5 Table 4: Market Share of Cotton Traders by Ownership 7 Table 5: Movement in Price Indices 16 Table 6: Yield Growth of Cotton 17 Table 7: Production and Average Yield of Cotton in the World 18 Table 8: Staple-wise Cotton Consumption and Count-wise Yarn Production 20 Table 9: Official and Trade Estimates of Cotton Production 22 Table1 0: Trends of Cotton Exports 23 Table 11: Initial Values 33 Table 12: Price Elasticities 34 Table 13: Net Income Changes Without Compensation 37 Table 14: Net Income Changes With Compensation (Tax Exemption for Weavers) 39 Table 15: Net Income Changes With Compensation (No Tax / Producer Subsidies) 39 Table 16: Changes in Export Values 40 Table 17: Changes in Government Revenue - Tax Exemption for Weavers 41 Table 18: Changes in Government Revenue - Producer Subsidy for Weavers 41 Table 19: Gainers and Losers Under Different Liberalization Policies 44 Table 20: Short-term and Long-term Elasticities 51 Table 21: Different Set of Elasticities for Sensitivity Analysis 58 Table 22: Results of the Sensitivity Analysis Under Different Sets of Elasticities 59 ... In PAGE 4: ...iv LIST OF TABLES Table 1: World Cotton Export Market 1 Table 2: India apos;s Share and Ranking in the World Cotton and Textile Markets 2 Table 3: Average Daily Wage Comparison Among Sectors 5 Table 4: Market Share of Cotton Traders by Ownership 7 Table 5: Movement in Price Indices 16 Table 6: Yield Growth of Cotton 17 Table 7: Production and Average Yield of Cotton in the World 18 Table 8: Staple-wise Cotton Consumption and Count-wise Yarn Production 20 Table 9: Official and Trade Estimates of Cotton Production 22 Table 10: Trends of Cotton Exports 23 Table1 1: Initial Values 33 Table 12: Price Elasticities 34 Table 13: Net Income Changes Without Compensation 37 Table 14: Net Income Changes With Compensation (Tax Exemption for Weavers) 39 Table 15: Net Income Changes With Compensation (No Tax / Producer Subsidies) 39 Table 16: Changes in Export Values 40 Table 17: Changes in Government Revenue - Tax Exemption for Weavers 41 Table 18: Changes in Government Revenue - Producer Subsidy for Weavers 41 Table 19: Gainers and Losers Under Different Liberalization Policies 44 Table 20: Short-term and Long-term Elasticities 51 Table 21: Different Set of Elasticities for Sensitivity Analysis 58 Table 22: Results of the Sensitivity Analysis Under Different Sets of Elasticities 59 ... In PAGE 4: ...iv LIST OF TABLES Table 1: World Cotton Export Market 1 Table 2: India apos;s Share and Ranking in the World Cotton and Textile Markets 2 Table 3: Average Daily Wage Comparison Among Sectors 5 Table 4: Market Share of Cotton Traders by Ownership 7 Table 5: Movement in Price Indices 16 Table 6: Yield Growth of Cotton 17 Table 7: Production and Average Yield of Cotton in the World 18 Table 8: Staple-wise Cotton Consumption and Count-wise Yarn Production 20 Table 9: Official and Trade Estimates of Cotton Production 22 Table 10: Trends of Cotton Exports 23 Table 11: Initial Values 33 Table1 2: Price Elasticities 34 Table 13: Net Income Changes Without Compensation 37 Table 14: Net Income Changes With Compensation (Tax Exemption for Weavers) 39 Table 15: Net Income Changes With Compensation (No Tax / Producer Subsidies) 39 Table 16: Changes in Export Values 40 Table 17: Changes in Government Revenue - Tax Exemption for Weavers 41 Table 18: Changes in Government Revenue - Producer Subsidy for Weavers 41 Table 19: Gainers and Losers Under Different Liberalization Policies 44 Table 20: Short-term and Long-term Elasticities 51 Table 21: Different Set of Elasticities for Sensitivity Analysis 58 Table 22: Results of the Sensitivity Analysis Under Different Sets of Elasticities 59 ... In PAGE 4: ...iv LIST OF TABLES Table 1: World Cotton Export Market 1 Table 2: India apos;s Share and Ranking in the World Cotton and Textile Markets 2 Table 3: Average Daily Wage Comparison Among Sectors 5 Table 4: Market Share of Cotton Traders by Ownership 7 Table 5: Movement in Price Indices 16 Table 6: Yield Growth of Cotton 17 Table 7: Production and Average Yield of Cotton in the World 18 Table 8: Staple-wise Cotton Consumption and Count-wise Yarn Production 20 Table 9: Official and Trade Estimates of Cotton Production 22 Table 10: Trends of Cotton Exports 23 Table 11: Initial Values 33 Table 12: Price Elasticities 34 Table1 3: Net Income Changes Without Compensation 37 Table 14: Net Income Changes With Compensation (Tax Exemption for Weavers) 39 Table 15: Net Income Changes With Compensation (No Tax / Producer Subsidies) 39 Table 16: Changes in Export Values 40 Table 17: Changes in Government Revenue - Tax Exemption for Weavers 41 Table 18: Changes in Government Revenue - Producer Subsidy for Weavers 41 Table 19: Gainers and Losers Under Different Liberalization Policies 44 Table 20: Short-term and Long-term Elasticities 51 Table 21: Different Set of Elasticities for Sensitivity Analysis 58 Table 22: Results of the Sensitivity Analysis Under Different Sets of Elasticities 59 ... In PAGE 4: ...iv LIST OF TABLES Table 1: World Cotton Export Market 1 Table 2: India apos;s Share and Ranking in the World Cotton and Textile Markets 2 Table 3: Average Daily Wage Comparison Among Sectors 5 Table 4: Market Share of Cotton Traders by Ownership 7 Table 5: Movement in Price Indices 16 Table 6: Yield Growth of Cotton 17 Table 7: Production and Average Yield of Cotton in the World 18 Table 8: Staple-wise Cotton Consumption and Count-wise Yarn Production 20 Table 9: Official and Trade Estimates of Cotton Production 22 Table 10: Trends of Cotton Exports 23 Table 11: Initial Values 33 Table 12: Price Elasticities 34 Table 13: Net Income Changes Without Compensation 37 Table1 4: Net Income Changes With Compensation (Tax Exemption for Weavers) 39 Table 15: Net Income Changes With Compensation (No Tax / Producer Subsidies) 39 Table 16: Changes in Export Values 40 Table 17: Changes in Government Revenue - Tax Exemption for Weavers 41 Table 18: Changes in Government Revenue - Producer Subsidy for Weavers 41 Table 19: Gainers and Losers Under Different Liberalization Policies 44 Table 20: Short-term and Long-term Elasticities 51 Table 21: Different Set of Elasticities for Sensitivity Analysis 58 Table 22: Results of the Sensitivity Analysis Under Different Sets of Elasticities 59 ... In PAGE 4: ...iv LIST OF TABLES Table 1: World Cotton Export Market 1 Table 2: India apos;s Share and Ranking in the World Cotton and Textile Markets 2 Table 3: Average Daily Wage Comparison Among Sectors 5 Table 4: Market Share of Cotton Traders by Ownership 7 Table 5: Movement in Price Indices 16 Table 6: Yield Growth of Cotton 17 Table 7: Production and Average Yield of Cotton in the World 18 Table 8: Staple-wise Cotton Consumption and Count-wise Yarn Production 20 Table 9: Official and Trade Estimates of Cotton Production 22 Table 10: Trends of Cotton Exports 23 Table 11: Initial Values 33 Table 12: Price Elasticities 34 Table 13: Net Income Changes Without Compensation 37 Table 14: Net Income Changes With Compensation (Tax Exemption for Weavers) 39 Table1 5: Net Income Changes With Compensation (No Tax / Producer Subsidies) 39 Table 16: Changes in Export Values 40 Table 17: Changes in Government Revenue - Tax Exemption for Weavers 41 Table 18: Changes in Government Revenue - Producer Subsidy for Weavers 41 Table 19: Gainers and Losers Under Different Liberalization Policies 44 Table 20: Short-term and Long-term Elasticities 51 Table 21: Different Set of Elasticities for Sensitivity Analysis 58 Table 22: Results of the Sensitivity Analysis Under Different Sets of Elasticities 59 ... In PAGE 4: ...iv LIST OF TABLES Table 1: World Cotton Export Market 1 Table 2: India apos;s Share and Ranking in the World Cotton and Textile Markets 2 Table 3: Average Daily Wage Comparison Among Sectors 5 Table 4: Market Share of Cotton Traders by Ownership 7 Table 5: Movement in Price Indices 16 Table 6: Yield Growth of Cotton 17 Table 7: Production and Average Yield of Cotton in the World 18 Table 8: Staple-wise Cotton Consumption and Count-wise Yarn Production 20 Table 9: Official and Trade Estimates of Cotton Production 22 Table 10: Trends of Cotton Exports 23 Table 11: Initial Values 33 Table 12: Price Elasticities 34 Table 13: Net Income Changes Without Compensation 37 Table 14: Net Income Changes With Compensation (Tax Exemption for Weavers) 39 Table 15: Net Income Changes With Compensation (No Tax / Producer Subsidies) 39 Table1 6: Changes in Export Values 40 Table 17: Changes in Government Revenue - Tax Exemption for Weavers 41 Table 18: Changes in Government Revenue - Producer Subsidy for Weavers 41 Table 19: Gainers and Losers Under Different Liberalization Policies 44 Table 20: Short-term and Long-term Elasticities 51 Table 21: Different Set of Elasticities for Sensitivity Analysis 58 Table 22: Results of the Sensitivity Analysis Under Different Sets of Elasticities 59 ... In PAGE 4: ...iv LIST OF TABLES Table 1: World Cotton Export Market 1 Table 2: India apos;s Share and Ranking in the World Cotton and Textile Markets 2 Table 3: Average Daily Wage Comparison Among Sectors 5 Table 4: Market Share of Cotton Traders by Ownership 7 Table 5: Movement in Price Indices 16 Table 6: Yield Growth of Cotton 17 Table 7: Production and Average Yield of Cotton in the World 18 Table 8: Staple-wise Cotton Consumption and Count-wise Yarn Production 20 Table 9: Official and Trade Estimates of Cotton Production 22 Table 10: Trends of Cotton Exports 23 Table 11: Initial Values 33 Table 12: Price Elasticities 34 Table 13: Net Income Changes Without Compensation 37 Table 14: Net Income Changes With Compensation (Tax Exemption for Weavers) 39 Table 15: Net Income Changes With Compensation (No Tax / Producer Subsidies) 39 Table 16: Changes in Export Values 40 Table1 7: Changes in Government Revenue - Tax Exemption for Weavers 41 Table 18: Changes in Government Revenue - Producer Subsidy for Weavers 41 Table 19: Gainers and Losers Under Different Liberalization Policies 44 Table 20: Short-term and Long-term Elasticities 51 Table 21: Different Set of Elasticities for Sensitivity Analysis 58 Table 22: Results of the Sensitivity Analysis Under Different Sets of Elasticities 59 ... In PAGE 4: ...iv LIST OF TABLES Table 1: World Cotton Export Market 1 Table 2: India apos;s Share and Ranking in the World Cotton and Textile Markets 2 Table 3: Average Daily Wage Comparison Among Sectors 5 Table 4: Market Share of Cotton Traders by Ownership 7 Table 5: Movement in Price Indices 16 Table 6: Yield Growth of Cotton 17 Table 7: Production and Average Yield of Cotton in the World 18 Table 8: Staple-wise Cotton Consumption and Count-wise Yarn Production 20 Table 9: Official and Trade Estimates of Cotton Production 22 Table 10: Trends of Cotton Exports 23 Table 11: Initial Values 33 Table 12: Price Elasticities 34 Table 13: Net Income Changes Without Compensation 37 Table 14: Net Income Changes With Compensation (Tax Exemption for Weavers) 39 Table 15: Net Income Changes With Compensation (No Tax / Producer Subsidies) 39 Table 16: Changes in Export Values 40 Table 17: Changes in Government Revenue - Tax Exemption for Weavers 41 Table1 8: Changes in Government Revenue - Producer Subsidy for Weavers 41 Table 19: Gainers and Losers Under Different Liberalization Policies 44 Table 20: Short-term and Long-term Elasticities 51 Table 21: Different Set of Elasticities for Sensitivity Analysis 58 Table 22: Results of the Sensitivity Analysis Under Different Sets of Elasticities 59 ... In PAGE 4: ...iv LIST OF TABLES Table 1: World Cotton Export Market 1 Table 2: India apos;s Share and Ranking in the World Cotton and Textile Markets 2 Table 3: Average Daily Wage Comparison Among Sectors 5 Table 4: Market Share of Cotton Traders by Ownership 7 Table 5: Movement in Price Indices 16 Table 6: Yield Growth of Cotton 17 Table 7: Production and Average Yield of Cotton in the World 18 Table 8: Staple-wise Cotton Consumption and Count-wise Yarn Production 20 Table 9: Official and Trade Estimates of Cotton Production 22 Table 10: Trends of Cotton Exports 23 Table 11: Initial Values 33 Table 12: Price Elasticities 34 Table 13: Net Income Changes Without Compensation 37 Table 14: Net Income Changes With Compensation (Tax Exemption for Weavers) 39 Table 15: Net Income Changes With Compensation (No Tax / Producer Subsidies) 39 Table 16: Changes in Export Values 40 Table 17: Changes in Government Revenue - Tax Exemption for Weavers 41 Table 18: Changes in Government Revenue - Producer Subsidy for Weavers 41 Table1 9: Gainers and Losers Under Different Liberalization Policies 44 Table 20: Short-term and Long-term Elasticities 51 Table 21: Different Set of Elasticities for Sensitivity Analysis 58 Table 22: Results of the Sensitivity Analysis Under Different Sets of Elasticities 59 ... In PAGE 6: ... Cotton export has been restricted by the Indian government for many years. Despite the substantial degree of economic liberalization since 1991, the government has not considered changing the policy, and as a result, India is far from being a major exporter in the world cotton market ( Table1 ). Considering one fourth of the world apos;s cotton-cultivated land acreage is in India and one eighth of the world apos;s cotton is produced in the country, the market share is extremely small.... In PAGE 28: ... Also, the political background of the incumbent prime minister and his cabinet members - whether they are pro-farmer or pro-handloom - matters significantly for quota allocation. Looking at the past trends, one may well wonder why so much cotton was exported under the quota in the year 1986/87, when cotton production had dropped sharply from the year before ( Table1 0). It is also difficult to explain why so little cotton export was allowed in 1991/92 compared to the year before, despite the increase in cotton production.... In PAGE 28: ... The more carefully one analyzes the trends of cotton exports from the table, the more one is convinced that the export quota is decided erratically and inconsistently, with little scientific basis. Table1 0: Trends of Cotton Exports (thousand of 170 kg bales) Cotton Year Production (as per DCD) Production (as per CAB) Consumption by Mills Import Export 1980/81 7,010 7,800 7,678 -- 697 1981/82 7,884 8,400 7,123 50 400 1982/83 7,534 7,717 7,561 nil 665 1983/84 6,386 7,516 8,485 nil 353 1984/85 8,506 10,150 9,150 50 179 1985/86 8,727 10,700 9,167 nil 450 1986/87 6,905 9,500 9,520 nil 1,367 1987/88 6,432 9,000 9,491 300 44 1988/89 8,744 10,600 9,666 225 77 1989/90 11,422 13,575 10,236 nil 1,371 1990/91 9,759 11,700 10,757 -- 1,190 1991/92 10,276 11,900 10,309 300 77 1992/93 12,067 13,500 11,281 115 1,376 1993/94 11,855 12,150 11,405 300 390 1994/95 11,756 13,850 11,937 589 108 Source: Office of the Textile Commissioner, GOI (1995) Fluctuation of Cotton Prices and Speculation ... In PAGE 38: ... All the initial values used in the simulation are shown in Table 11. Table1 1: Initial Values Commodity Supply India (mkg) Demand India (mkg) Export India (mkg) Supply World (mkg) Demand World (mkg) Producer Price (Rs/kg) Consumer Price (Rs/kg) World Price (Rs/kg) Cotton 1,900 1,800 100 16,500 16,600 53 55 61 Cotton Yarn 1,500 1,300 200 16,600 16,800 91 97 106 Cone Yarn 1,050 850 93 100 Hank Yarn 450 450 83 89 Cotton Textiles 1,400 1,000 400 9,600 10,000 217 221 221 Powerloom Handloom 960 440 600 400 360 40 216 219 Sources: EICA (1995), ICAC (1994), Office of the Textile Commissioner (1995) etc. Assumption on Hank Yarn Another assumption is in regards to hank yarn.... In PAGE 39: ... All the elasticities for India are shown in Table 12. Table1 2: Price Elasticities (A) Short-term Elasticities (India) (B) Long-term Elasticities (India) Elasticity for \ w.... In PAGE 42: ... While cotton farmers apos; net income will increase by 15 per cent, the averaged net income of the weaving industry will decline by 6 per cent. Compared to powerloom weavers, handloom weavers are hit even more seriously by free cotton exports - their net income will decrease by 12 per cent ( Table1 3). The net income of the spinning industry will change significantly by the export liberalization, because both cotton (input for spinning mills) prices and cotton yarn (output) prices will go up.... In PAGE 42: ... The net income of the spinning industry will change significantly by the export liberalization, because both cotton (input for spinning mills) prices and cotton yarn (output) prices will go up. Table1 3: Net Income Changes Without Compensation Present Case Case 1 Case 2 Export Policy Cotton and yarn export quotas No export quotas Policy Changes Hank Yarn Obligation 50% 50% None Cotton Farmer 0% +15% +15% Spinning Mill 0% +1% +15% Textile Weaver 0% -6% -8% Powerloom Handloom 0% 0% -3% -12% -4% -16% Net Income Changes Total 0% 2% +2% 11 By definition in this analysis, net income is gross margin (i.... In PAGE 43: ...resent levels of 5.75 per cent for cone yarn and from 0 to 3.45 per cent for hank yarn in any cases. Both the comparisons between Case 4 and Case 5 ( Table1 4) and between Case 7 and Case 8 (Table 15) suggest if the hank yarn obligation is removed, extra subsidies will be needed to compensate the income losers. Assuming that the government can efficiently distribute subsidies to them, both the powerloom and handloom weavers will be rescued (Cases 5 and 8).... In PAGE 44: ...39 Table1 4: Net Income Changes With Compensation (Tax Exemption for Weavers) Case 3 Case 4 Case 5 Export Policy No export quotas Policy Changes Hank Yarn Obligation 50% None None Compensatory Policies No tax (weaver) No tax (weaver) No tax (weaver) and cone yarn consumer subsidy (handloom) Cotton Farmer +15 % +15 % +15 % Net Income Spinning Mill +1 % +15 % +15 % Changes Textile Weaver -2 % -3 % -1 % Powerloom Handloom +1 % -7 % -0 % -11 % -0 % -3 % Total +4 % +5 % +6 % Table 15: Net Income Changes With Compensation (Subsidies to Weacers) Case 6 Case 7 Case 8 Export Policy No export quotas Hank Yarn Obligation 50% None None Policy Changes Compensatory Policies Producer subsidy (weaver) Producer subsidy (weaver) Producer subsidy (weaver) and yarn consumer subsidy (handloom) Cotton Farmer +15 % +15 % +15 % Spinning Mill +0 % +15 % +15 % Textile Weaver +5 % +3 % +4 % Powerloom Handloom +6 % +1 % +6 % -3 % +6 % +2 % Net Income Changes Total +7 % +8 % +9 % Changes in Export Values The simulation analysis has so far focused on the income changes of various groups, paying special attention to handloom weavers. When we analyze the impacts of the policy reform, however, there are two other important factors to be considered - changes in exports and government revenue.... In PAGE 44: ...39 Table 14: Net Income Changes With Compensation (Tax Exemption for Weavers) Case 3 Case 4 Case 5 Export Policy No export quotas Policy Changes Hank Yarn Obligation 50% None None Compensatory Policies No tax (weaver) No tax (weaver) No tax (weaver) and cone yarn consumer subsidy (handloom) Cotton Farmer +15 % +15 % +15 % Net Income Spinning Mill +1 % +15 % +15 % Changes Textile Weaver -2 % -3 % -1 % Powerloom Handloom +1 % -7 % -0 % -11 % -0 % -3 % Total +4 % +5 % +6 % Table1 5: Net Income Changes With Compensation (Subsidies to Weacers) Case 6 Case 7 Case 8 Export Policy No export quotas Hank Yarn Obligation 50% None None Policy Changes Compensatory Policies Producer subsidy (weaver) Producer subsidy (weaver) Producer subsidy (weaver) and yarn consumer subsidy (handloom) Cotton Farmer +15 % +15 % +15 % Spinning Mill +0 % +15 % +15 % Textile Weaver +5 % +3 % +4 % Powerloom Handloom +6 % +1 % +6 % -3 % +6 % +2 % Net Income Changes Total +7 % +8 % +9 % Changes in Export Values The simulation analysis has so far focused on the income changes of various groups, paying special attention to handloom weavers. When we analyze the impacts of the policy reform, however, there are two other important factors to be considered - changes in exports and government revenue.... In PAGE 44: ... First, the export liberalization will undoubtedly increase the volume of cotton export, as the cotton farmers respond to the increase in domestic cotton price. Not only in terms of volume but also in terms of value cotton exports will increase by 37 to 44 per cent in value ( Table1 6). This is because India is not a major exporter of cotton (even after the liberalization) in the world market, and hence the export increase does not have major impacts on the world price.... In PAGE 45: ... As a result of the increase in cotton exports, the modest increase in cotton yarn exports and stable cotton textile exports after the policy reform, the total value of exports of the entire cotton sector will increase, though not to a large extent. Table1 6: Changes in Export Values Case 1 Case 2 Case 4 Case 8 Export Policy No export quotas Hank Yarn Obligation 50% None 50% None Policy Changes Compensatory Policies None None No tax (weaver) Producer subsidy (weaver) and yarn consumer subsidy (handloom) Cotton +44 % +37 % +44 % +37 % Yarn +2 % +7 % +2 % +3 % Textile -1 % -2 % +1 % +2 % Export Value Changes Total +2 % +2 % +3 % +4 % Financial Cost of the Compensatory Scheme Compared to its modest impacts on exports, the financial costs of the liberalization-cum-compensation will be a matter of greater concern for the government. If direct subsidies are not provided to textile weavers, the government can still run a budget surplus in the cotton sector without levying producer tax (Cases 3 and 4 in Table 17).... In PAGE 45: ... Table 16: Changes in Export Values Case 1 Case 2 Case 4 Case 8 Export Policy No export quotas Hank Yarn Obligation 50% None 50% None Policy Changes Compensatory Policies None None No tax (weaver) Producer subsidy (weaver) and yarn consumer subsidy (handloom) Cotton +44 % +37 % +44 % +37 % Yarn +2 % +7 % +2 % +3 % Textile -1 % -2 % +1 % +2 % Export Value Changes Total +2 % +2 % +3 % +4 % Financial Cost of the Compensatory Scheme Compared to its modest impacts on exports, the financial costs of the liberalization-cum-compensation will be a matter of greater concern for the government. If direct subsidies are not provided to textile weavers, the government can still run a budget surplus in the cotton sector without levying producer tax (Cases 3 and 4 in Table1 7). However, as apparent from the previous analysis, handloom weavers will not be relieved by such compensation schemes without direct subsidies, as their net income will decline by 7 to 11 per cent (Table 14).... In PAGE 45: ... If direct subsidies are not provided to textile weavers, the government can still run a budget surplus in the cotton sector without levying producer tax (Cases 3 and 4 in Table 17). However, as apparent from the previous analysis, handloom weavers will not be relieved by such compensation schemes without direct subsidies, as their net income will decline by 7 to 11 per cent ( Table1 4). In other words, this level of compensation is not enough for handloom weavers, even if the hank yarn obligation is still enforced.... In PAGE 46: ...41 Table1 7: Changes in Government Revenue - Tax Exemption for Weavers (Rs. million per year) Case 3 Case 4 Case 5 Export Liberalization No export quotas Hank Yarn Obligation 50% None Cotton Consumer Tax on Mills 4,225 (+489) 4,242 (+506) 4,242 (+506) Yarn Consumer Tax on Weavers 4,100 (-2,591) 4,224 (-2,467) 4,224 (-2,467) Cone Yarn Subsidy for Handlooms 0 (0) 0 (0) -4,496 (-4,496) Textile Producer Tax on Weavers 0 (-4,229) 0 (-4,229) 0 (-4,229) Textile Producer Subsidy for Weavers 0 (0) 0 (0) 0 (0) Total Revenue 8,325 (-6,330) 8,467 (-6,189) 3,970 (-10,685) ( ): Change from the present revenue.... In PAGE 46: ...illion to Rs.4,100 million per year. The difference is Rs.2,591 million. When both the export quotas and the hank yarn obligation are removed, the level of the government deficit needed to fully compensate the powerloom weavers apos; losses is Rs.2,989 million (US$62 million) (Case 7 in Table1 8). Further, in order to compensate the losses of handlooms, the government will have to spend Rs.... In PAGE 46: ... Further, in order to compensate the losses of handlooms, the government will have to spend Rs.2,256 million (US$47 million) for handloom subsidies annually (Case 8 in Table1 8). While the textiles producers receive subsidies, cotton farmers will not be taxed to balance the budget, because taxing the farmers, who are politically strong, is nearly impossible.... In PAGE 46: ... If we take the administrative costs into account, this level of the government expenditure will become even larger; the entire cost could be nearly US$500 million. Table1 8: Changes in Government Revenue - Producer Subsidy for Weavers (Rs. million per year) Case 6 Case 7 Case 8 Export Liberalization No export quotas Hank Yarn Obligation 50% None Cotton Consumer Tax on Mills 4,224 (+488) 4,241 (+505) 4,241 (+505) Yarn Consumer Tax on Weavers 4,112 (-2,579) 4,238 (-2,453) 4,238 (-2,453) Cone Yarn Subsidy for Handlooms 0 (0) 0 (0) -2,256 (-2,256) Textile Producer Tax on Weavers 0 (-4,229) 0 (-4,229) 0 (-4,229) Textile Producer Subsidy for Weavers -11,469 (-11,469) -11,469 (-11,469) -11,469 (-11,469) Total Revenue -3,132 (-17,788) -2,989 (-17,645) -5,246 ... In PAGE 49: ...44 Table1 9: Gainers and Losers Under Different Liberalization Policies O: gain, X: loss, -: indifferent, : depends upon the situation As nationwide quotas are relaxed, cotton farmers and traders will naturally benefit while mills and weaving sectors will lose in (A). The impact differs in (B), where all the quotas are auctioned in the market, rather than allocated by the government.... ..."

"... In PAGE 4: ...iv LIST OF TABLES Table 1: World Cotton Export Market 1 Table 2: India apos;s Share and Ranking in the World Cotton and Textile Markets 2 Table 3: Average Daily Wage Comparison Among Sectors 5 Table 4: Market Share of Cotton Traders by Ownership 7 Table 5: Movement in Price Indices 16 Table 6: Yield Growth of Cotton 17 Table7 : Production and Average Yield of Cotton in the World 18 Table 8: Staple-wise Cotton Consumption and Count-wise Yarn Production 20 Table 9: Official and Trade Estimates of Cotton Production 22 Table 10: Trends of Cotton Exports 23 Table 11: Initial Values 33 Table 12: Price Elasticities 34 Table 13: Net Income Changes Without Compensation 37 Table 14: Net Income Changes With Compensation (Tax Exemption for Weavers) 39 Table 15: Net Income Changes With Compensation (No Tax / Producer Subsidies) 39 Table 16: Changes in Export Values 40 Table 17: Changes in Government Revenue - Tax Exemption for Weavers 41 Table 18: Changes in Government Revenue - Producer Subsidy for Weavers 41 Table 19: Gainers and Losers Under Different Liberalization Policies 44 Table 20: Short-term and Long-term Elasticities 51 Table 21: Different Set of Elasticities for Sensitivity Analysis 58 Table 22: Results of the Sensitivity Analysis Under Different Sets of Elasticities 59 ... In PAGE 22: ... Table 6: Yield Growth of Cotton (kgs / ha) State 1989/90 1990/91 1991/92 1992/93 1993/94 1994/95 Andhra Pradesh 458 485 494 506 610 650 Gujarat 229 277 212 308 351 339 Haryana 498 400 488 440 347 354 Maharashtra 135 93 79 141 87 99 Punjab 592 418 593 533 340 421 All India Average 300 269 266 311 278 300 Source: Office of the Textile Commissioner, GOI The yield of cotton is still far lower than in many other countries, although agricultural technological progress has made it possible for India to produce long-staple cotton. The average yield of cotton per hectare of India is only half of the world average of 600 kgs per ha ( Table7 ). The cotton yields of countries such as the US, China and Egypt are somewhere between 500 to 750 kgs per ha.... ..."

"... In PAGE 4: ...iv LIST OF TABLES Table 1: World Cotton Export Market 1 Table 2: India apos;s Share and Ranking in the World Cotton and Textile Markets 2 Table 3: Average Daily Wage Comparison Among Sectors 5 Table 4: Market Share of Cotton Traders by Ownership 7 Table 5: Movement in Price Indices 16 Table 6: Yield Growth of Cotton 17 Table 7: Production and Average Yield of Cotton in the World 18 Table 8: Staple-wise Cotton Consumption and Count-wise Yarn Production 20 Table 9: Official and Trade Estimates of Cotton Production 22 Table10 : Trends of Cotton Exports 23 Table 11: Initial Values 33 Table 12: Price Elasticities 34 Table 13: Net Income Changes Without Compensation 37 Table 14: Net Income Changes With Compensation (Tax Exemption for Weavers) 39 Table 15: Net Income Changes With Compensation (No Tax / Producer Subsidies) 39 Table 16: Changes in Export Values 40 Table 17: Changes in Government Revenue - Tax Exemption for Weavers 41 Table 18: Changes in Government Revenue - Producer Subsidy for Weavers 41 Table 19: Gainers and Losers Under Different Liberalization Policies 44 Table 20: Short-term and Long-term Elasticities 51 Table 21: Different Set of Elasticities for Sensitivity Analysis 58 Table 22: Results of the Sensitivity Analysis Under Different Sets of Elasticities 59 ... In PAGE 28: ... Also, the political background of the incumbent prime minister and his cabinet members - whether they are pro-farmer or pro-handloom - matters significantly for quota allocation. Looking at the past trends, one may well wonder why so much cotton was exported under the quota in the year 1986/87, when cotton production had dropped sharply from the year before ( Table10 ). It is also difficult to explain why so little cotton export was allowed in 1991/92 compared to the year before, despite the increase in cotton production.... ..."

"... In PAGE 4: ...iv LIST OF TABLES Table 1: World Cotton Export Market 1 Table 2: India apos;s Share and Ranking in the World Cotton and Textile Markets 2 Table 3: Average Daily Wage Comparison Among Sectors 5 Table 4: Market Share of Cotton Traders by Ownership 7 Table 5: Movement in Price Indices 16 Table 6: Yield Growth of Cotton 17 Table 7: Production and Average Yield of Cotton in the World 18 Table 8: Staple-wise Cotton Consumption and Count-wise Yarn Production 20 Table9 : Official and Trade Estimates of Cotton Production 22 Table 10: Trends of Cotton Exports 23 Table 11: Initial Values 33 Table 12: Price Elasticities 34 Table 13: Net Income Changes Without Compensation 37 Table 14: Net Income Changes With Compensation (Tax Exemption for Weavers) 39 Table 15: Net Income Changes With Compensation (No Tax / Producer Subsidies) 39 Table 16: Changes in Export Values 40 Table 17: Changes in Government Revenue - Tax Exemption for Weavers 41 Table 18: Changes in Government Revenue - Producer Subsidy for Weavers 41 Table 19: Gainers and Losers Under Different Liberalization Policies 44 Table 20: Short-term and Long-term Elasticities 51 Table 21: Different Set of Elasticities for Sensitivity Analysis 58 Table 22: Results of the Sensitivity Analysis Under Different Sets of Elasticities 59 ... ..."

"... In PAGE 4: ...iv LIST OF TABLES Table 1: World Cotton Export Market 1 Table 2: India apos;s Share and Ranking in the World Cotton and Textile Markets 2 Table3 : Average Daily Wage Comparison Among Sectors 5 Table 4: Market Share of Cotton Traders by Ownership 7 Table 5: Movement in Price Indices 16 Table 6: Yield Growth of Cotton 17 Table 7: Production and Average Yield of Cotton in the World 18 Table 8: Staple-wise Cotton Consumption and Count-wise Yarn Production 20 Table 9: Official and Trade Estimates of Cotton Production 22 Table 10: Trends of Cotton Exports 23 Table 11: Initial Values 33 Table 12: Price Elasticities 34 Table 13: Net Income Changes Without Compensation 37 Table 14: Net Income Changes With Compensation (Tax Exemption for Weavers) 39 Table 15: Net Income Changes With Compensation (No Tax / Producer Subsidies) 39 Table 16: Changes in Export Values 40 Table 17: Changes in Government Revenue - Tax Exemption for Weavers 41 Table 18: Changes in Government Revenue - Producer Subsidy for Weavers 41 Table 19: Gainers and Losers Under Different Liberalization Policies 44 Table 20: Short-term and Long-term Elasticities 51 Table 21: Different Set of Elasticities for Sensitivity Analysis 58 Table 22: Results of the Sensitivity Analysis Under Different Sets of Elasticities 59 ... ..."