Election year gift for farmers? Wheat MSPs already 112% of defined cost could be hiked further

Election year gift for farmers? Wheat MSPs already 112% of defined cost could be hiked further

The minimum support price (MSP) for wheat was 112% over its A2+FL costs in 2017-18, but with elections around the corner, the government plans to raise it by another 6%.

New Delhi | Updated: October 2, 2018 5:32 AM

Representative Image: Reuters

The minimum support price (MSP) for wheat was 112% over its A2+FL costs in 2017-18, but with elections around the corner, the government plans to raise it by another 6%. The announcement to raise the MSP by Rs 105 to Rs 1,840 per quintal, is likely to be made on Wednesday after the Cabinet approval.

Prices of chana that were already 78% over the A2+FL costs in the last rabi season are to be raised by 5% to Rs 4,620 per quintal.

FE had estimated that if market prices of crops (except sugarcane) are lower than the MSP by 20%, this could cost the exchequer as much as Rs 1,75,000 crore in a full year; this assumes that all the crops will be brought to the market since farmers will find it more profitable to sell the crop to the government and then buy back what they need for consumption when the prices fall.

The announcement of MSP of rabi crops assume significance this year as sowing begins from October and the monsoon rainfall was 22% deficient in September bringing moisture level down.

The Cabinet will consider the MSP of all five rabi crops and the recommendation is to increase them in the range of 2-21% from the last year’s minimum support prices (MSPs), sources said. According to the proposal, masur may see a hike of 5.29% to Rs 4,475 a quintal, sources said.

The MSP of mustard, the key oilseed crop of the winter season, is also likely to be increased 5% to Rs 4,200/quintal. In case of safflower, the MSP may be increased 20.61% to Rs 4,945 a quintal as its benchmark price last year was less than the promised 50% over its A2+FL cost of production. Barley MSP is likely to see 2.13% increase at Rs 1,440/quintal. The government has already announced kharif crops’ MSPs at 150% over their cost (A2+FL).

Prabhudatta Mishra

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