PM's MSP hike like applying 'Band-Aid to massive hemorrhage': Rahul Gandhi

Days after the Union Cabinet approved a steep rise in the minimum support price of crops, giving farmers the promised 50 per cent return on input costs, Congress president Rahul Gandhi compared the increase to applying a Band-Aid to a massive haemorrhage.

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

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.

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However, some experts have argued that the effective hike is only per cent as the government has changed the criteria for calculating MSP.

Attacking Modi on Twitter, Rahul Gandhi wrote ''PM's grand MSP increase is budgeted at just 15,000 Cr. for India's 120 million farmers which is like applying a Band-Aid to a massive haemorrhage.''

Citing the farm loan waiver announced by Congress-JS(S) government in Karnataka on Thursday, he said ''To put this MSP increase in perspective: in Karnataka, we've waived small farmer loans of over 34,000 Cr! Marketing Vs Action,'' Gandhi added.

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.