Minimum support price (MSP) hike: A higher support price could also fuel food inflation. The government on Wednesday hiked the minimum support price (MSP) or purchase price for paddy crops up to Rs 200 per quintal as it looked to fulfill its poll promise to give farmers 50 per cent more rate than their cost of production. The decision, taken by the Union Cabinet headed by Prime Minister Narendra Modi, comes less than a year before the 2019 general election. An announcement to give farmers a price of 1.5 times of cost was made by Union Minister Arun Jaitley in Budget 2018 presented on February 1 this year. The announcement of higher MSP coupled with the forecast of normal monsoon this year, could further boost foodgrains output. However, a higher support price could also fuel food inflation. The Cabinet Committee on Economic Affairs (CCEA), in its meeting, approved the MSP of 14 Kharif (summer-sown) crops. 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 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 supplies the grains under the food security law. Paddy is the main kharif (summer sown) crop, the sowing of which has already begun with the onset of southwest monsoon. Earlier, sources had said that the MSP rate proposed by the agriculture ministry is higher than the government's farm advisory body Commission for Agricultural Costs and Prices (CACP), considering growing farm distress because of a 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.<doc-sep>Ministers Ravi Shankar Prasad, Rajnath Singh, Radha Mohan Singh, Harsimrat Kaur Badal announce the hike. (Photo: Renuka Puri) Ministers Ravi Shankar Prasad, Rajnath Singh, Radha Mohan Singh, Harsimrat Kaur Badal announce the hike. (Photo: Renuka Puri) WITH THE 2019 general elections round the corner, the Cabinet Wednesday approved the highest absolute hike ever in the Minimum Support Price (MSP) for paddy, and a significant hike for other Kharif crops. 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. Announcing the Cabinet’s “historic” decision, Union Home Minister Rajnath Singh said that the MSP for common grade paddy has been increased from Rs 1,550 per quintal to Rs 1,750 per quintal, an increase of nearly 13 per cent. The Indian Express had reported Wednesday that the government was set to implement the highest ever single-year raise in MSP for paddy from this Kharif season to the tune of about Rs 200 per quintal. READ | Where MSP becomes hard nut to crack Paddy is the country’s main Kharif crop, and Singh said the government would ensure that the crop is bought at the MSP across the country. With an increase of Rs 525 for every quintal, taking the MSP to Rs 1,950, Bajra will now give a return of 97 per cent over the input costs estimated by the CACP. Paddy is the country’s main Kharif crop, and Singh said the government would ensure that the crop is bought at the MSP across the country. Paddy is the country’s main Kharif crop, and Singh said the government would ensure that the crop is bought at the MSP across the country. The increase in the MSPs of 14 crops range from Rs 180 a quintal for Grade A paddy to Rs 1,400 per quintal for Moong. The MSP hike, Singh said, will cost the exchequer more than Rs 15,000 crore in the current fiscal. The CACP’s estimates for the input costs taken into account is as per the A2+FL formula, which covers actual paid-out costs plus an imputed value of unpaid family labour. READ | MSP hike yet another ‘jumla’, an ‘electoral lollypop’: Congress The Indian Express had reported that the previous best hike for MSP for paddy was Rs 155 per quintal in 2008-2009, in the election year of the first tenure of the UPA. Singh said farmers in India are the largest producers, consumers and customers, and yet have never got the right value for their produce since Independence. If the farmer’s income goes up, purchasing capacity will also increase leading to a “positive impact” on the wider economy, said Singh. The increase, he said, will instil confidence in farmers. READ | Against the grain: Throwing caution to the winds There was “hataasha” (frustration) and “niraasha” (disappointment) among the farmers for not getting the right price for their crops, Singh said, adding that “if anyone understood this reality it was our Prime Minister”. He said that the Prime Minister had reassured farmers that they will get one-and-a-half times the input cost for their crops, and the Cabinet decision ensures that. The government’s procurement of grain has steadily increased since 2000. (Express Archive) The government’s procurement of grain has steadily increased since 2000. (Express Archive) Presenting the budget for the 2018-2019 financial year, Union Finance Minister Arun Jaitley had said: “I am pleased to announce that as per pre-determined principle, Government has decided to keep MSP for the all unannounced crops of kharif at least at one and half times of their production cost. I am confident that this historic decision will prove an important step towards doubling the income of our farmers.” To announce the substantial hike in MSP, Singh was flanked by three senior Cabinet colleagues at the media briefing — Union Minister for Agriculture and Farmer Welfare Radha Mohan Singh, Union Minister for Food Processing Harsimran Kaur Badal, and Union Minister for Law & Justice and Electronics & Information Technology Ravi Shankar Prasad. READ | PM Modi says govt committed to agriculture goals “No government has given such a substantive hike in the MSP in independent India’s history,” said Singh. “I, too, come from a farmer family,” he said, “and even I had never imagined that there would be a government some day that will increase the MSP by this extent in one go.” Responding to a question, the Home Minister played down fears that this hike could lead to increase in the rate of inflation. He said that the NDA government has managed to check the rate of inflation in the last four years and the rate of GDP growth has been the double the rate of inflation. He said there are many factors that can lead to an increase in the rate of inflation, and to say that the hike in MSP will lead to a higher rate of inflation will not be correct.<doc-sep>Like in the UPA-I, this massive hike in MSP for paddy comes in the election year of the Narendra Modi government. Like in the UPA-I, this massive hike in MSP for paddy comes in the election year of the Narendra Modi government. The Government appears all set for the highest ever single-year raise in the minimum support price (MSP) of paddy from this Kharif season to honour its Budget announcement to ensure MSP is kept at least at one and half times of the production cost. A highly placed government source told The Indian Express that the government is considering raising the paddy MSP to the tune of about Rs 200 per quintal. The MSP for common grade of paddy was Rs 1,550 per quintal the previous year. The previous best paddy MSP hike stood at Rs 155 a quintal (including the bonus of Rs 50) a decade ago in the 2008-09 election year of UPA-I. Like in the UPA-I, this massive hike in MSP for paddy comes in the election year of the Narendra Modi government. This hike assumes significance given that it covers the crop which constitutes over 50 per cent of the total acreage of food grain crops during Kharif season. This move is expected to put an additional burden of an estimated Rs 12,000 crore on account of procurement based on records of procurement in previous years. Rice procurement last year stood at over 36 million tonnes which corresponds to about 55 million tonnes of paddy. During an interaction with sugarcane farmers last week, Prime Minister Narendra Modi had promised to “approve” the implementation of 150 per cent of input cost as MSP for kharif crops during the “forthcoming meeting” of the Cabinet this week. “I am pleased to announce that as per pre-determined principle, Government has decided to keep MSP for the all unannounced crops of kharif at least at one and half times of their production cost. I am confident that this historic decision will prove an important step towards doubling the income of our farmers,” Finance Minister Arun Jaitley had announced presenting the Budget in Parliament early this year. The government is also considering a hike upwards of Rs 200 a quintal in the MSP for pulses (Tur, Moong, Urad) for the kharif season. In fact, the government may hike the MSP for moong to the tune of about Rs 500 a quintal. While the move is expected to cheer the large farming community, such massive hike in the MSP may have an inflationary pressure. Officials, however, played down these fears suggesting that the inflationary pressure depends more upon the changing consumption patterns and its demand supply-mismatch. “There need not be inflationary pressure associated depending upon the marketable surplus of the commodity, but it is definitely likely to have pressure on the government Budget,” said the source. Many kharif corps don’t have a well-oiled procurement mechanism like paddy. So the fiscal implications of the MSP hike to meet 150 per cent of input cost of other kharif crops cannot be determined immediately. For example, NAFED procures pulses from the market and later sells it when required. It undertakes this operation with help of credit limits and seeks government help in case of losing money while liquidating its stock. The government source suggested that the MSP hike for pulses may entail an additional cost of Rs 5000-10000 crore depending upon the scale of its intervention. The massive hike in MSP is one of the two (the other being Rs 5-lakh health protection cover for over 10 crore families) major schemes announced by the Modi government as it enters the last lap of its term.<doc-sep>The Centre is all set to announce the highest ever single-year raise in the minimum support price (MSP) for paddy crop, The Indian Express has reported. MSP of paddy from this Kharif season could be raised to as much as Rs 200 per quintal. At its previous best under the United Progressive Alliance in the 2008-09 election year, MSP hike stood at Rs 155 a quintal. In the budget, the government had announced that it would maintain the MSP at least at one and half times of the production cost. “I am pleased to announce that as per pre-determined principle, Government has decided to keep MSP for the all unannounced crops of kharif at least at one and half times of their production cost. I am confident that this historic decision will prove an important step towards doubling the income of our farmers,” Finance Minister Arun Jaitley had announced in the Budget.<doc-sep>
PM Modi assured that the government is committed to the development of the agriculture sector(File Photo) PM Modi assured that the government is committed to the development of the agriculture sector(File Photo) Announcing the highest ever single-year raise in the minimum support price of paddy, Prime Minister Narendra Modi on Wednesday said the government has fulfilled its promise to farmers. “I am very happy that the promise made by the government to our farmer brothers and sisters of giving minimum support price at 1.5 times the production cost has been fulfilled. There has been a historic increase in the MSP. Congratulations to all farmers,” he tweeted in Hindi. Assuring that the government is committed to the development of the agriculture sector, PM Modi said, “We have been taking steps in this direction and will continue to do so,” he added. The government has raised the MSP by Rs 200 per quintal. The decision, taken at a Union Cabinet meeting headed by Prime Minister Narendra Modi on Wednesday, will put an additional burden of Rs 12,000 crore on the exchequer. The massive hike in MSP is one of the two major schemes announced by the Modi government. (File) The massive hike in MSP is one of the two major schemes announced by the Modi government. (File) The Indian Express first reported on Tuesday that the MSP for a common grade of paddy would be increased from Rs 1,550 per quintal to Rs 1,750 from this Kharif season. The government first announced in the Union Budget that it would take steps to ensure that the MSP is kept at least at one and half times of the production cost. The massive hike in MSP is one of the two (the other being Rs 5-lakh health protection cover for over 10 crore families) major schemes announced by the Modi government as it enters the last lap of its term. The government also hiked the MSP for pulses and cotton. 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. BJP President Amit Shah called this as a historic decision and said, “Modi govt has always taken decisions in favour of farmers,” in a quote to ANI. Home Minister Rajnath Singh also lauded decision and told ANI, ” Farmers are the biggest producer and consumer but they have never got what they deserved. Modi has realised this and will give 1.5 extra of what they produce. Uttar Pradesh Chief Minister Yogi Adityanath said the decision would improve the quality life of farmers and that this will bring happiness. The announcement of higher MSP coupled with the forecast of a normal monsoon this year could further boost foodgrains output. However, the higher support price could also fuel food inflation.