The government increased the MSP for paddy by a record Rs 200 per quintal.
New Delhi: The government's decision to hike the minimum support price (MSP) for 14 khariff crops would boost farmers' income, resulting in a huge rural demand push to the Indian economy, industry body Assocham said.
Last week, the BJP-led government increased the MSP for paddy by a record Rs 200 per quintal that will cost the exchequer over Rs 15,000 crore, and help fulfil its poll promise to give farmers 50 per cent more than their cost of production.
"The MSP may not be an ideal and a perfect solution to address the farmers' woes, but the long term reforms would take long time and our farmers cannot be allowed to suffer that long. "The entire rural landscape constitutes about 70 per cent of our consumer basket and unless they have adequate purchasing power, the much-needed demand push for India Inc would not materialise," Assocham Secretary General D S Rawat said in a statement.
Rawat further said the concern over MSP increase leading to inflationary pressure may be addressed by improving the administrative machinery in the foodgrains and vegetable mandis, which are still under the clutches of cartels.
"The state governments have a key role in demolishing the mandi cartels which trigger a huge volatility in agri prices, especially those of fruits and vegetables," the industry body said.