Concerned about inflation, the government on Thursday hiked the minimum support price (MSP) of wheat by Rs 50 a quintal for the marketing year starting April 2014, rejecting a proposal for a higher increase.
"Wheat MSP has been increased by Rs 50 per quintal to Rs 1,400 for 2013-14 crop year as against Rs 1,350 last year," food minister KV Thomas said.
The Cabinet Committee on Economic Affairs approved the hike in wheat MSP as recommended by the Commission for Agriculture Costs and Prices (CACP), the government advisory body. The CCEA rejected agriculture minister Sharad Pawar's proposal to pay farmers Rs 1,450 per quintal of wheat.
Asked why the agriculture ministry's proposal wasn't accepted, Thomas said, "We are concerned about inflation. When MSP goes up, obviously prices in the open market rise and we have no control on that." The CACP had recommended an increase of Rs 50 per quintal of wheat, keeping in view high inflation in cereals and exports becoming unviable. It felt the existing MSP was comfortably higher than the projected cost of production.
"We need to take a balanced decision of protecting both farmers and consumers. We are giving a price support to farmers and not the income support," Thomas said.
The CCEA also approved MSP increases for gram by Rs 100 per quintal to Rs 3,100, masur by Rs 50 per quintal to Rs 2,950 and mustard seed by Rs 50 per quintal to Rs 3,050.
The MSP of barley has been raised by Rs 120 per quintal to Rs 1,100 and safflower by Rs 200 per quintal to Rs 3,000 for 2014-15.
Inflation as measured by the wholesale price index rose to a seven-month high of 6.46% in September, while it was 9.84% as per the consumer price index amid higher prices of cereals and vegetables.
The increase in wheat MSP is likely to lead to a rise in the government's food subsidy bill in the next fiscal.
Sowing of wheat starts in October and harvesting takes place from April.
Badal terms hike as 'cruelest joke of the decade'
Chandigarh: Dubbing the Rs 50 hike in MSP of wheat as the "cruelest joke of the decade", the Punjab government has demanded that the MSP be set at Rs 1,855 per quintal.
Lambasting the Centre's decision on Thursday, chief minister Parkash Singh Badal took strong exception to the decision of the Cabinet Committee on Economic Affairs.
The CM said the price did not even cover the cost of production and was much below the expectations of farmers.
"The latest decision defies all logic and economic common sense, especially in light of the inflationary trend in the country," he said in a statement.
Assailing the Centre for penalising farmers, Badal said it was providing foodgrains at cheaper rates to consumers under the Food Security Programme at the cost of producers who were being constantly denied their rightful margins.
Calling it a "cruel bias" against farmers, Badal demanded that the price be set at Rs 1,855 "in accordance with the prevalent cost of inputs in market".
The "non-remunerative" MSP coupled with anti-farmer policies of the Centre was primarily responsible for the slowdown of the agricultural growth, he said, adding the Punjab farmers were already reeling under heavy burden of Rs 32,000-crore debt.