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.
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.
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.
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.
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.
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.
“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.