Union Cabinet meet today to approve increase in MSP for Kharif crops ahead of 2019 polls:

The Centre is set to radically increase the minimum support price (MSP) for Kharif crops as a move to fulfill its budget promise and address farmers’ concerns about the cost of crops.

The Cabinet Committee on Economic Affairs (CCEA) meeting has been scheduled for 10.50 am on Wednesday, to approve the support price of Kharif crops, and the MSP for paddy is likely to rise sharply by Rs 200 to Rs 1,750 per quintal to honour the budget announcement to ensure that farmers get at least 1.5 times of the production cost.

The cost of the revised MSP is estimated to be around Rs 33,500 crore.

Minimum support price is a form of market intervention by the government to insure farmers against any sudden fall in agricultural produce prices. The MSP is a guaranteed price for their produce from the State.

Among 14 Kharif (summer-sown) crops, the maximum hike in the MSP is likely to be in case of ragi as per the revised MSP, which is expected to be increased by Rs 900 to Rs 2,700 per quintal for 2018-19 crop year (July-June), sources said.

Last week, Prime Minister Narendra Modi had announced that the Union Cabinet will approve the increase in MSP to at least 1.5 times of the production cost in the forthcoming meeting.

Paddy is the main kharif crop, the sowing of which has already begun with the onset of the southwest monsoon.

“In some of the kharif crops where the MSP is already 1.5 times of the production cost, the increase will be minimal. But there will a sharp increase in crops like paddy, ragi and moong, whose MSP are well below the 150 percent of the input cost,” an official source said.

The MSP decided in Wednesday’s meeting will largely apply to paddy and pulses but will benefit ‘nutri-cereals’ like millets the most. The added cost of MSP is 0.2 percent of GDP, according to the cabinet note. The share of paddy in the additional outgo will be around Rs 12,300 crore, The Times of India reported.

Among millets, ragi will see a maximum hike of over 52 percent compared to its current MSP, followed by 42 percent for jowar, and 36 percent for bajra. The hike in MSP of nigerseed (oilseed) and moong (pulse) is also expected to be higher.

A range of crops will be covered by the latest MSP, unlike the usual focus on rice and wheat. A procurement mechanism is to be announced later. The highest priority, in calculating the cost of production, has been given to labour, which is about 53 percent while other costs like fertilisers, farm animals, pesticides, seeds and irrigation make up the remaining.

According to a report in The Economic Times, the government has delayed the announcement of MSP of kharif crops, the sowing of which has already begun, as it was weighing whether to take such a big political decision considering the huge financial burden on the exchequer.

Farm experts are of the view that the sharp increase in the paddy MSP could further boost India’s rice production, which touched an all-time high of 111 million tonnes in 2017-18 crop year and the output is much more than the domestic demand, the report said.

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