To fulfil its promise to fix the Minimum Support Price (MSP) of crops at least one-and-half times more than the cost of production, the Union Cabinet on Wednesday approved a record increase in the MSP of 14 kharif crops for 2018-19. The decision will cost the exchequer over Rs 15,000 crore.
The MSP hike varies from crop to crop. The highest year-on-year increase is in case of ragi, followed by jawar. The MSP of ragi has gone up by 52.47 per cent while niger seed saw a 45.11 per cent increase. The Cabinet approved 42.94 per cent increase in the MSP of jawar hybrid.
According to the Union Cabinet decision, 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 Grade A paddy. 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 during the UPA-I regime.
In pulses, tur MSP stands raised to Rs 5,675 per quintal from Rs 5,450, and that of moong at Rs 6,975 from Rs 5,575. Urad MSP has been hiked to Rs 5,600 from Rs 5,400 per quintal. The MSP of jawar has been increased from Rs 1,700 to Rs 2,430 per quintal that of bajra from Rs 1,425 to Rs 1,950 per quintal. The MSP of cotton (medium staple) has been raised to Rs 5,150 from Rs 4,020 and that of cotton (long staple) to Rs 5,450 from Rs 4,320 per quintal.
Applauding the Cabinet Committee on Economic Affairs (CCEA) on MSP, Union Home Minister Rajnath Singh said, “It is a historical decision. Though farmers are the biggest producers, they never received their due. This Government is changing it now.”
As per the decision, the MSP for ragi has also been increased from Rs 1,900 to Rs 2,897 a quintal; maize from Rs 1,425 to Rs 1,700 a quintal; groundnut from Rs 4,450 to Rs 4,890 a quintal; sunflower from Rs 4,100 to Rs 5,388; soyabean from Rs 3,050 to Rs 3,399; sesamum from Rs 5,300 to Rs 6,249 and nigar seed from Rs 4,050 to Rs 5,877 a quintal.
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 MSP is the rate at which the Government buys grain from farmers. Paddy is the main crop grown in the kharif (summer) season. Normally, MSP is announced just before the start of the sowing season to help farmers choose the crop they want to sow. Sowing of kharif crops has already started with the onset of the monsoon in June.
The move to hike the MSP for kharif crops is in line with the Government’s Budget announcement of increasing the support price by one-and-a-half times of the production cost for kharif crops.
The move by the Modi Government comes ahead of crucial polls this year in States like Madhya Pradesh, Rajasthan and Chhattisgarh and the lok Sabha elections due in 2019. With a 50 per cent more profit for farmers, the Modi Government hopes to position itself as a pro-farmer party as this is the highest hike ever in a single year for paddy. The plan for a higher MSP gained momentum after the 2017 Gujarat elections where farm protests were seen to reflect a “problem of plenty” as agriculturists expressed discontent over falling prices.
It is estimated that hike in MSP will help over 15 crore farmers across the country. As per the Registrar General of India & Census report 2011, the total farmers or cultivators population of India is 118.7 million (2011) and 144.3 million agricultural workers/labourers which consists 31.55 of total rural population.
“Since MSP hikes in the past have never percolated down to the farmers fully, the Government plans to back the increase with a procurement mechanism. The new MSP regime hinges on wider procurement of crops. The details of procurement and storage are being worked out. The three options have been suggested,” officials said.
Benod Pandey of All India Progressive Kisan Mahasangthan said that a large number of farmers, especially in agrarian States, till rented lands. “They pay the cost of the inputs and the rent for the land. land rents, in fact, vary across States. These sections would not be benefitted from MSP,” he added.
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.