The Centre is set to hike the minimum support price (MSP) for sugar and lentils, a key policy move aimed at boosting production of the two scarce commodities that have pushed up food inflation sharply.
MSP is the assured price the government offers farmers, which also serves as the base price for private traders, helping avoid less-profitable sales.
Support price for sugar is set to go up 8.5 per cent, from Rs 129.84 to Rs 140, when the new crop cycle begins in October, a government source said.
Support prices for at least two varieties of pulses — tur and urad — will also be raised by over 5 per cent for the oncoming kharif or summer-sown season, HT has learnt. Base prices of all other crops are likely to remain unchanged.
Higher MSPs for wheat and rice have caused growers to shift away from sugar and lentil farming, one of the reasons for shortage. India currently faces a major shortage of lentils, the single biggest driver of food inflation, which remains upwards of 17 per cent.
About 20 million tonnes of pulses are needed during 2010-11, according to official estimates, while production has stagnated at 14 million tonnes.