Keeping up with its promise in the Budget 2018, the Centre has hiked the minimum support price (MSP) for kharif crops. The MSP of paddy has been likewise raised to 1.5 times the current rates. The decision was taken by the Union cabinet in a meeting held on Wednesday. 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, it is learnt that MSP of paddy has been hiked by Rs 250 per quintal. MSP for paddy was at Rs 1550 per quintal in 2017-18. The details of other MSP hikes are awaited.
The MSP hike is seen as a major move to woo farmers in the country ahead of the 2019 general elections. 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’ income and made the ruling BJP unpopular in rural areas, a key reason behind the drubbing it suffered in recent by-elections.
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.
Addressing a gathering of farmers last week, Modi said his government would announce the increase in MSPs this week.
(With inputs from Reuters)
