MSP of major crops expected to be increased by 10

Union Agriculture Minister Radha Mohan Singh says Minimum Support Price MSP for key crops would be announced in the next two weeks
MSP of major crops expected to be increased by 10

Keeping the promises made in manifesto of the Bharatiya Janata Dal (BJP) Union Agriculture Ministry is expected to announce the minimum support price (MSP) for key crops over the next two weeks. The Ministry has geared up to face deficient Monsoon, as predicted by the Indian Meteorological Department(IMD) and hike in MSP to provide much needed support to the farmers.

Talking to R&M, after the press conference to highlight the Agriculture Ministry’s achievement the last one year, Singh said, “ We are committed to the promise made in our manifesto and the MSP would come at appropriate time, hopefully within 15 days.”

“We discussed about all major crops and feel that the farmers must get nearly 50 per cent over the cost of production on sale of their produce. We would offer them lucrative price,” he said.

Key crops like Paddy, Wheat and Maize have not seen more than 3 to 5 per cent hike in the previous revisions done by the UPA government. The Minister indicated that that the MSP can go up by 10 per cent for some crops depending upon the need.

On Tuesday RBI Governor Raghuram Rajan, while announcing Monetary review, said that there is a strong correlation between minimum support prices and resulting food inflation as well as overall inflation. If these price increases are limited it will help.

The broader point of MSP has been that the support price has focused on a couple of commodities in a limited area in India, he said.

Singh said that increase in the MSP would not be limited to a few crops and it would be for across the board commodities. “ We will make efforts to have uniform prices across the country to prevent lopsided production and distortion of prices,” he added..

The ruling BJP had promised to fix MSPs at 50 per cent higher than production costs. However, fearing market distortion of price, the Ministry is diverting from the party line and would follow the MSP model as suggested by the Commission for Agricultural Costs and Prices (CACP). The Commission has already solicited views of states and central ministries as well as the demand, supply, output cost and price trends of different commodities in the domestic and global markets. The increase in MSP would be based on the CACP’s recommendations and it has taken into consideration all these factors.

The proposal to set MSPs at 50 per cent above the weighted cost of crop output was first mooted by the National Commission on Farmers headed by M S Swaminathan in the mid-2000s. However, neither the previous government nor the present one accepted it.

Agriculture experts recommended that the government should take into consideration the ground realities which varies state to state. In some states farmers are not even aware about the MSP and the National Sample Survey has recently revealed this fact. In agriculturally developed states like Gujarat and Maharashtra cost of production goes up because of higher inputs costs and higher wages for labourers.

So, to support farmers, the experts feel that there is a need of a rational MSP policy based on ground realities and the government should also focus on expanding irrigation to eastern and southern India.

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BK Jha is the Special Correspondent of Rural & Marketing. Prior to this he has been associated with The Hindustan Times, Political and Business Daily along with many other media organisations.
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