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Union Cabinet approves new MSP for kharif crops, hikes paddy procurement rate by Rs 200 per quintal

Last week, Prime Minister Narendra Modi had announced that the Cabinet will approve the increase in MSP to at least 1.5 times of the production cost in the forthcoming meeting.

Edited by: India TV Business Desk, New Delhi [ Updated: July 04, 2018 14:08 IST ]
The massive hike in MSP of paddy and other kharif crops
Image Source : PTI

The massive hike in MSP of paddy and other kharif crops comes in the election year of the NDA government. 

The Cabinet Committee on Economic Affairs (CCEA) today approved the support price of kharif crops. the cabinet raised the he minimum support price (MSP) for paddy sharply by Rs 200 to Rs 1,750/quintal to honour the budget announcement to ensure that farmers get at least 1.5 times of the production cost.

Last week, Prime Minister Narendra Modi had announced that the Cabinet will approve the increase in MSP to at least 1.5 times of the production cost in the forthcoming meeting. 

Paddy is the main kharif (summer sown) crop, the sowing of which has already begun with the onset of southwest monsoon. 

According to PTI 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 MSP of paddy (common) was Rs 1,550 per quintal and Rs 1,590 per quintal for paddy (grade A) variety. 

The MSP of cotton (medium staple) has been increased to Rs 5,150 from Rs 4,020 and that of cotton (long staple) to Rs 5,450 from 4,320 per quintal.

In pulses, tur MSP has been raised to Rs 5,675 per quintal from Rs 5,450, and that of moong to Rs 6,975 per quintal from Rs 5,575. Urad MSP has been hiked to Rs 5,600 from Rs 5,400 per quintal. 

Hike in paddy MSP will increase the food subsidy bill by over Rs 11,000 crore based on procurement figure of the 2016-17 marketing year (October-September). 

The Food Corporation of India (FCI), the government's nodal agency for procurement and distribution of foodgrains, buys wheat and rice from farmers at MSP and supply the grains under the food security law. 

Earlier, sources had said that the MSP rate proposed by the agriculture ministry is higher than the government's farm advisory body CACP, considering growing farm distress because of fall in prices of most crops, owing to bumper production. 

India is estimated to have harvested a record foodgrains production at 279.51 million tonnes in the 2017-18 crop year (July-June) on all-time high output of rice, wheat, coarse cereals and pulses. 

The announcement of higher MSP coupled with forecast of normal monsoon this year could further boost foodgrains output. However, the higher support price could also fuel food inflation. 

The massive hike in MSP of paddy and other kharif crops comes in the election year of the NDA government. 

Sources said the agriculture ministry has proposed higher MSP than what has been recommended by the government advisory body CACP considering growing farm distress because of fall in prices of most crops owing to bumper production, they said. 

In this year's general budget, the government had announced that it would fix a support price at least 1.5 times of the cost of the production. This was the BJP's poll promise in 2014 general elections. 

Normally, the MSP is announced just before the start of the sowing to help farmers choose the crop they want to sow. Sowing of kharif crops has begun with the onset of southwest monsoon and harvesting will start from October.

(With inputs from PTI)

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