Cabinet approves hike in Minimum Support Price for Kharif crops

The Union Cabinet on Wednesday approved the Minimum Support Price (MSP) for Kharif crops for 2018-19.

The Cabinet Committee on Economic Affairs (CCEA) has 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.

Add WION as a Preferred Source

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.

In its Union Budget released this year in 2019, the government had assured the farmers to pay 1.5 times the cost of production. 

The minimum support price had remained in single digit over the past three years. The drastic change in the government's policy is seen as an attempt to woo the country's 260 million farmers ahead of 2019 Lok Sabha elections.

Analysts and economists have warned that the move could help push up inflation and add to the fiscal deficit and prompt India's central bank to raise interest rates more steeply than expected.

According to a report, the crop support prices have hit farmer's income and is one of the reasons for BJP's loss in the recent elections. 

(With inputs from Agencies)