Steep hike in MSP of kharif crops with eye on Lok Sabha polls

New Delhi: Keen to address the concerns of farmers in the run up to Lok Sabha polls next year and with the aim of fulfilling its 2014 poll promise of doubling their income, the BJP-led NDA government on Wednesday announced a massive hike of upto 50 per cent in the minimum support price (MSP) of kharif crops.

The MSP for paddy has been raised by around Rs 250 per quintal and ragi saw an increase of Rs 997 per quintal. The move, though, could lead to inflation in the long run. However, home minister Rajnath Singh, who announced the decision after the Union Cabinet meeting, dismissed fears of possible inflation.

“We are concerned about inflation. It is not correct to say that inflation will go up. We have controlled inflation in last four years and will succeed in controlling it in future as well,” he said.

The hike in MSP will cost the exchequer over Rs 15,000 crore, he added. Minimum support price (MSP) is the price at which the government purchases crops from the farmers, whatever may be the price for the crops. The MSP scheme serves the purpose of protecting farmers from distress sale and procurement of food for public distribution system.

The MSP hike is clearly a political move as it has come just six months before the BJP-ruled Madhya Pradesh, Chhattisg-arh and Rajasthan — where the party faces heavy anti-incumbency — go to polls in December this year.

The BJP is keen to bolster its prospects in these politically crucial states, especially Madhya Pradesh, which had witnessed a bloody farmers’  agitation in June last year, when six farmers were killed in police firing while protesting for better price for their produce. The three-BJP ruled states together send 65 MPs to Lok Sabha.

The Narendra Modi-led government has fast tracked the upward revision of MSP despite lack of unanimity among farmer leaders and states, till last week, on fixing prices for all summer crops.

Mr Modi had, however, clearly said after his meeting with sugarcane farmers last week, that the Union Cabinet will take a call on MSP for kharif crops soon.

Subsequently, the Union Cabinet hiked the price paid to farmers for paddy by a record Rs 250 per quintal and by up to 52 per cent fir the other summer-sown crops.

With this decision, the NDA government has fulfilled its election promise of providing farmers 1.5 times of their cost of producing a crop.

Wednesday’s decision covers 14 kharif crops including paddy, cotton, soyabean, ragi, bajra, maize and some pulses. MSP using the same principle for rabi crops, like wheat and mustard, is yet to be announced.

The previous highest hike in paddy MSP was Rs 170 a quintal in the 2012-13 crop year. In the last four years, the NDA government has raised the paddy MSP between `50-80 per quintal.

Reacting to the decision, Mr Modi said the government has fulfilled its promise of hiking the minimum support price to 1.5 times the production cost of farming produce and said the government is committed to the development of the agriculture sector.

“I am very happy that the promise made by the government to our farmer brothers and sisters of giving minimum support price at 1.5 times the production cost has been fulfilled. There has been a historic increase in the MSP. Congratulations to all farmers,” he tweeted in Hindi.

The government’s price advisory body Commission for Agricultural Costs and Prices (CACP) has calculated production cost of paddy at Rs 1,166 per quintal and the government has raised the MSP of paddy (common grade) by over Rs 250 to Rs 1,750 per quintal for 2018-19 season.

The support price of Grade A variety of paddy has been raised by `180 per quintal to Rs 1,770. The increase in paddy MSP is 50-51 per cent over its production cost.

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

India is estimated to have harvested a record foodgrains production at 279.51 million tonnes in the 2017-18 crop year (July-June) on all-time high output of rice, wheat, coarse cereals and pulses.

Reacting to the big hike in MSP of kharif crops, the Congress said the hike in minimum support price (MSP) for kharif crops, announced by the government today, was a “jumla” (rhetoric) and “electoral lollypop” aimed at wooing farmers ahead of the 2019 Lok Sabha election.

“The MSP declared today does not fulfil the promise of cost plus 50 per cent of produce. If this is not betrayal with farmers, what is it?” he asked.

“Farmers have been duped yet again. This MSP does not fulfil the promise of giving cost plus 50 per cent to farmers as per CACP recommendations. It is a betrayal with the farmers. This is merely a PR exercise on MSP and is a mere ‘electoral lollypop’,” he told reporters.

Reacting to the decision, Yogendra Yadav, president of Swaraj India and founder of Jai Kisan Andolan, while giving credit to farmers’ organisation for forcing the Centre to act on the issue, said that “it is a small victory for farmers. In this election year, the Modi government has been forced to partially act, at least on paper, on the promise of remunerative MSP that it had made before the previous election”.

Mr Yadav cautioned that the MSP announcement is not the price computed at 50 per cent above comprehensive cost (C2) being demanded by farmers’ organisations. Also it is not the price promised by Mr Modi in hundreds of election meetings and contained in the 2014 election manifesto of BJP.

“It is not an immediate relief to farmers. It is merely a promise, the fulfilment of which depends on government procurement and intensive support, something that has been lacking till now,” he added.