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Eye on farmers,Govt to revise MSP norms

Ahead of the Lok Sabha elections,the Government is likely to revise the parameters determining the minimum support price (MSP) for agricultural crops for the benefit of farmers...

Written by Ravish Tiwari | New Delhi |
January 15, 2009 11:25:27 pm

Ahead of the Lok Sabha elections,the Government is likely to revise the parameters determining the minimum support price (MSP) for agricultural crops for the benefit of farmers.

The Cabinet Committee on Economic Affairs (CCEA),which is slated to meet on Thursday,under the chairmanship of Prime Minister Manmohan Singh,is likely to examine the methodological issues in fixing MSP.

Inclusion of three new items — premium paid for crop insurance,marketing and transportation costs incurred by farmers,and rental value of land under crops — will top the proposals while rearranging the MSP fixation criteria adopted by Commission for Agricultural Costs and Prices (CACP). The proposed rejig includes incorporating rental value of owned land under cultivation as new cost item to compensate for the land used for cultivation.

While PM’s Economic Advisory Committee (EAC) is learnt to have not favoured the inclusion of the cost of transportation,the Agriculture Ministry has supported it saying that farmers need to be compensated for bringing their produce to the market.

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The other proposal,also supported by the EAC,has suggested the need for regular data collection for the premium being paid by farmers to make objective assessment for the cost of premium. The proposal has said that the interest rates actually paid by the farmers for agricultural credit need not be included in the cost calculations. The ministry has reasoned that the current mechanism allows for 12.5 per cent of interest rate on the working capital for half of the crop period,which is higher than the current rate of crop loans to the farmers. The proposal rejects expanding the MSP ambit to fruits and vegetables.

While the proposed restructuring of MSP mechanism is aimed at benefiting the farmers,the proposal for the Cabinet consideration has rejected demands for upward revision of the tariff rates on edible oil and additional protection for cotton,beyond the acceptable WTO rates.

The proposed rearrangement is based on the recommendations of Y K Alagh Committee,which was set up by the previous NDA regime in May 2003.

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First published on: 15-01-2009 at 11:25:27 pm

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