The Narendra Modi government has raised the minimum support price (MSP) of the 2023-24 paddy crop by Rs 143 per quintal, as against Rs 100, Rs 72, Rs 53 and Rs 65 for the preceding four years. One way to see this is through the lens of politics: National elections are hardly 10 months away. The paddy MSP was, after all, hiked by as much as Rs 200/quintal in 2018-19, before the last Lok Sabha polls. But this time, there are some economic compulsions too. At 72.8 million tonnes, government stocks of rice (including the milled-grain equivalent of paddy) and wheat on June 1 are the lowest in six years for this date. Moreover, the southwest monsoon hasn’t been great so far, with all-India rainfall 56 per cent below the normal historical average during June 1-11. And with the US National Oceanic and Atmospheric Administration declaring the arrival of El Niño, which is expected to gradually strengthen into the winter, one must brace for the worst.
Simply put, the new agriculture year beginning with kharif plantings in June-July doesn’t look all that promising, coming after bumper harvests from four consecutive good monsoons (2018, which registered an overall 14 per cent rain deficiency, was also an El Niño year). There are enough stocks of cereals, sugar and pulses (especially chana) for now. Milk availability has improved considerably from the peak shortages seen in February-March, while the market is being well-supplied by imported palm, soyabean and sunflower oil amid a crash in global prices. But things can change in the event of a subnormal monsoon impacting kharif acreages and crop yields. If the rains don’t adequately fill up irrigation reservoirs and recharge groundwater tables, the effects can even extend to the rabi season. It explains the flurry of decisions in recent months — from a ban on sugar exports to imposition of stocking limits on arhar and urad. The government clearly does not want to take a chance in an election year.
That being so, the significant increase in MSPs — not just for paddy, but also kharif pulses (moong, arhar and urad), oilseeds (groundnut and soyabean) and cotton — makes economic sense. Equally welcome is their being announced in time, before sowings are to pick up. It sends the right signals to farmers; they need to be incentivised to produce more in today’s situation where domestic supplies of most agro-commodities are finely balanced. However, higher MSPs may not help if the monsoon plays truant. Farmers suffer from low crop prices in most years of bumper production. One hopes 2023-24 isn’t going to be a year where they realise remunerative prices — with or without MSP — with not much to sell.
