Cabinet clears MSP increase, highest-ever for paddy crop

After Prolonged Delay, MSPs for Kharif Season Announced With Substantial Increases

After Prolonged Delay, MSPs for Kharif Season Announced With Substantial Increases

For the 2018-19 crop season, the MSP for paddy, the main crop planted during the ongoing kharif (summer) season, has been fixed at Rs 1,750 per quintal, 13% higher than previous year.

The new MSP rates will ensure that farmers get at least 150 per cent of the cost of production for each crop estimated by the Commission for Agricultural Prices and Production (CACP), a promise made by Prime Minister Narendra Modi in his interaction with the farming community last week.

Among pulses, tur will fetch Rs. 5,675, moong Rs. 6,975, and urad Rs. 5,600.

According to sources, the MSP of paddy (common grade) has been increased by Rs 200 to Rs 1,750 per quintal, while that of Grade A variety by Rs 160 per quintal to Rs 1,750.

The Narendra Modi government has cleared a new list of minimum support price for 14 summer (kharif) crops - the biggest in its tenure that will cost the state almost Rs 15,000 crore in public funds. Reports suggest that the Centre may have to bear Rs 12,000-15,000 crore annually to compensate farmers in case prices fall below the MSP in all crops except rice and wheat which are already being procured by state-run Food Corporation of India. The MSP for arhar has been raised to Rs 5,675 per quintal from Rs 5,450, while the input costs for cultivating one quintal of arhar works out to Rs 3,432, according to the CACP.

Incidentally, the MSP for the 2017-18 Kharif season was Rs 1550 per quintal which has now been enhanced to Rs 1750 per quintal. Asserting that farmers are biggest producers and consumers, Singh said, "After the country's independence, farmers have not got right price for their produce".

"This will translate into Rs 6000-8000 per acre gain for the farmers", said Singh, who added that the decision would have a positive impact on the economy with the help of the purchasing powers of the people in the rural areas getting a significant boost. The increase, he said, will instil confidence in farmers. Given that this is an election year, one feels the government will devise ways, such as higher procurement.

The government's procurement of grain has steadily increased since 2000.

After the central government announced the new MSP of 14 kharif crops for the 2018-19 season, agriculture scientist M S Swaminathan said the MSP announced was higher in absolute terms but below the recommended level. Prime Minister Modi described the hikes as "historic". Shubhada Rao, chief economist, Yes Bank said: "The impact from these MSP hikes will be 35 basis points to headline inflation in the current fiscal year, and another 35 basis points in the next".

The Opposition parties, on the other hand, dismissed the announcement as jumla (gimmicks) "They promised to implement the formula of cost plus 50 per cent as MSP".

Responding to a question, the Home Minister played down fears that this hike could lead to increase in the rate of inflation.

Singh also stated that the Cabinet Committee on Economic Affairs (CCEA) has also approved the proposal to pay the farmers price difference between the MSP and market in the event of the procurement agencies failing to procure crops.

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