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Cabinet hikes MSPs of six rabi crops

Oct 19, 2023 05:14 AM IST

Among the six crops, lentil (masur) prices were raised the most by ₹425 to ₹6,425 a quintal from ₹6,000 a quintal in the previous season in keeping with the government’s goal of reducing the dependence on imports for pulses

New Delhi The Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday approved hikes in minimum support prices (MSP) for six main rabi or winter-sown crops in line with its food policy of offering higher incentives for scarce commodities such as pulses and oilseeds.

The Union Cabinet approves hikes in MSPs for six main rabi crops. (AFP)
The Union Cabinet approves hikes in MSPs for six main rabi crops. (AFP)

Among the six crops, lentil (masur) prices were raised the most by 425 to 6,425 a quintal from 6,000 a quintal in the previous season in keeping with the government’s goal of reducing the dependence on imports for pulses, the commonest source of proteins for most Indians.

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The council of ministers raised the MSP for wheat, the main winter staple, by 150 to 2,275 a quintal (100 kg) for 2024-25, the highest increase for the grain since 2015-16. Ample crop output is crucial to keep a lid on prices and for rural prosperity in a country where nearly half the population depends on a farm-derived income.

“The Modi government has given priority to farmers’ welfare. The increase in the MSP of the rabi crops is in line with the Union Budget 2018-19 announcement of fixing the MSP at a level of at least 1.5 times of the all-India weighted average cost of production,” Union minister for information and broadcasting Anurag Thakur said. This translates to 50% returns over the cost of cultivation. The minister said the government had taken various measures to check a rise in food prices, including free distribution of grains.

MSPs are floor rates designed to avoid distress sale by farmers and send a price signal for private traders. These rates are mostly effective for cereals because the government buys grains in sufficiently large quantities at MSPs, unlike other items, which are procured in far less quantities.

Though an annual affair, the increase in the wheat MSP comes ahead of assembly polls in major producers of the staple, such as Madhya Pradesh and Rajasthan. Polls next month are also due in Chhattisgarh, Mizoram and Telangana.

Wheat and rice are essential to the country’s food security. The government procures them at MSP rates for distributing subsidized grains to nearly 800 million poor people under the National Food Security Act. MSP directly influences farmers’ decision to grow ample quantities of cereals.

Wheat is sown in October-November and harvested in April. The country had banned the export of wheat in May 2022, which is still in place, after a heatwave crimped output by about 3% to 106 million tonne that year, leading to high prices.

This led to a fall in government’s wheat purchases to a 15-year low of 18 million tonne that year, against a procurement target of 44 million tonne. In 2022-23, the government estimated wheat output to be a record 112 million tonne, but inflation in cereals continue to be in the double digits.

“The MSP rates for the rabi season will help to achieve targets set by the government for foodgrain production and self-sufficiency,” an agriculture ministry official said, adding the government had set 114 million tonne as the target for wheat output this year.

The council of ministers also cleared an increase of 105 for gram, another key winter-grown pulses variety, to 5,440 a quintal for 2024-25 against 5,335 per quintal in 2023-24. Among oilseeds, the government increased rapeseed-mustard MSP by 200 to 5,650 per quintal for the 2024-25 marketing season from 5,450 per quintal in 2023-24.

The MSP of safflower, another oilseed, was raised by 150 to 5,800 per quintal for 2024-25 from 5,650 per quintal. The Cabinet also increased the MSP of barley by 115 per quintal to 1,850 for 2024-25 from 1,735 per quintal this year.

However, A section of farm unions, including the Bharatiya Kisan Union, slammed the Cabinet’s decision, saying the increases in MSPs were too little. “The MSPs do not cover the rising costs of cultivation. Farmers are suffering losses in most crops. We reiterate our demand to make MSP a legal right,” said Gurnam Singh Chaduni, a leader of the Bharatiya Kisan Union.

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  • ABOUT THE AUTHOR
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    Zia Haq reports on public policy, economy and agriculture. Particularly interested in development economics and growth theories.

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