Keeping its promise made in the 2018 budget, the Cabinet Committee on Economic Affairs (CCEA) at its meeting on Wednesday approved the MSP of 14 kharif (summer-sown) crops. The MSP of paddy has been raised to 1.5 times the current rates. It has also been decided to hike the MSP of other crops by 50 per cent. The move is likely to cost the Centre around Rs 15,000 crore.
As per the cabinet's decision, the MSP of paddy has been hiked by Rs 250 per quintal. MSP for paddy was at Rs 1,550 per quintal in 2017-18.
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 paddy (grade A) variety.
The MSP of cotton (medium staple) has been increased to Rs 5,150 from Rs 4,020 and that of cotton (long staple) to Rs 5,450 from 4,320 per quintal.
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. The cabinet also raised the MSP of soybean and long staple cotton by 10.3 per cent and 20.7 per cent to Rs 3,399 and Rs 5,450, respectively, Singh said.
The MSP hike is seen as a major move to woo farmers in the country ahead of the 2019 general elections. The hike in support prices will not impact on food inflation and the government is confident in reining in rising consumer prices, said Union Home Minister Rajnath Singh announcing the decision during a press conference.
However, analysts and economists have warned the move could help push up inflation, add to the fiscal deficit and prompt the Reserve Bank of India to raise interest rates more steeply than expected.
However, the tight rein on crop MSPs has hit farmers’ incomes and made the ruling BJP unpopular in rural areas, a key reason behind the drubbing it suffered in recent byelections.
India, one of the world’s key producers of an array of farm commodities, announces MSPs for more than 20 crops each year to set a benchmark, but state agencies actually buy only rice and wheat at the support level.
Farmers voted overwhelmingly for Modi in the 2014 general election, sweeping him to power with an absolute majority, a first for any political party in 30 years. But his popularity has since faded, claims observers.
Addressing a gathering of farmers last week, Modi said his government would announce the increase in MSPs this week.
(With inputs from agencies)