In a move that will boost farmers’ incomes and blunt the impact of the drought, the Cabinet on Thursday raised the minimum support price (MSP) for unhusked rice and lentils.
MSP is the assured price at which the government buys grains from farmers. It also serves as the base price for private traders, thereby helping avoid distress or less profitable sales.
Purchase prices have been hiked moderately — ranging between 4 per cent and 12 per cent — for two grades of rice and three key lentils: tur, moong and sesame.
Announcing the hikes, Union Home Minister P. Chidambaram described the new prices as “attractive for farmers” and said states should crack down on hoarding or holding on to stocks to inflate prices.
The Cabinet also increased borrowing limits of states up to 4 per cent of their Gross State Domestic Product during 2009-10 to help ride out a year of drought and additional expenditures.
The hike in the MSP was recommended earlier by the Commission for Agricultural Costs and Prices, the official advisory panel on MSPs, for this kharif or summer crop of 2009-10.
But the government had not taken a call then. Now faced with a drought that will shave off farmers’ earnings, the government has finally announced the changes.
The MSP of the common grade rice has been raised from Rs 850 to Rs 950 per quintal (100 kg).
The MSP of ‘Grade A’ rice has been hiked to Rs 980 from Rs 880. An additional “incentive bonus” of Rs 50 per quintal over the MSP was also announced.
The MSP of tur goes up to Rs 2,300 from Rs 2,000 and moong from Rs 2,520 to Rs 2,760. The MSP for sesame has been hiked to Rs 2,850 from Rs 2,750.
More than 200 farming districts are reeling under a drought, prompting Agriculture Minister Sharad Pawar to predict a loss of 10 million tonnes of paddy this year.