Indian cabinet approves higher support prices for pulses and moderate hike in prices of paddy for farmers
New Delhi, Jun 3:
The Indian cabinet has approved a moderate hike in the minimum support price (MSP) of paddy by Rs 60 to Rs 1,470 per quintal for the 2016-17 kharif season while deciding to provide a significant rise in MSP for pulses to the farmers mainly to augment production.
The cabinet committee on economic affairs (CCEA) also approved relatively moderate hike in MSP for other kharif crops such as maize, groundnut and cotton. “The higher MSPs would increase investment and production through assured remunerative prives to farmers,” an official statement said.
MSP is the rate at which government agencies like Food Corporation of India (FCI) and other state government owned agencies procure the grain from farmers besides it also taken as benchmark prices in the market. As per CCEA approval, MSP for the grade A variety of paddy has also been hiked by around 4.1% to Rs 1510 per quintal.
In a bid to boost pulses output, CCEA has approved a hike in MSP of tur or arhar by 9.2% to Rs 5050 per quintal for coming kharif season which includes a special bonus of Rs 425 per quintal. This implies that effective rise in MSP is only Rs 200 per quintal. Similarly, for other pulses like moong and urad, the MSPs have been increased by more than 7% to Rs 5225 per quintal and by more than 8% to Rs 500 per quintal respectively. This includes bonus of Rs 425 per quintal for both the pulses.
Meanwhile Niti Aayog member Ramesh Chand recently had stated that prevailing market rates of pulses like tur, moong and urad are substantially higher than MSP, so any increase will not have much impact. “Farmers will grow pulses taking market prices into account,” Chand had said.
For oilseeds like groundnut, the cabinet has approved a moderate hike of 4.7% to Rs 4220 per quintal. Even MSP for sunflower and seasum seeds have been increased by close to 4% and more than 6% to Rs 3950 per quintal and Rs 5000 per quintal respectively. “This hike in MSP is expected to give a strong price signal to farmers to increase acreage and invest for increase in productivity of pulses and oilseeds,” the statement said.
Experts say that only increasing MSP is not going lead to jump in output if the government agencies do not purchase the grain from the farmers.
“Hike in MSP in a welcome step however the quantum of hike does not compensate increase in labour cost of farmers which has increased by around 15% to 20% because of deficient rainfall in the last two years,” Ashok Gulati, former chairman, Commission for Agricultural Costs and Prices (CACP) said.
Sowing of kharif crops would commence with the onset of southwest monsoon in June. Paddy, pulses and oilseeds are the main crop grown during this season. Kharif output is about 50-55% of the country’s annual foodgrain production
Recommending a revisit of grain procurement policy, the High Level Committee (HLC) for FCI restructuring chaired by former food minister Shanta Kumar last year stated that MSPs are announced for 23 commodities, but effectively price support operates primarily in wheat and rice and that too in selected states. “This creates highly skewed incentive structures in favour of wheat and rice. While country is short of pulses and oilseeds (edible oils), their prices often go below MSP without any effective price support,” the HLC had noted.
Despite the hype surrounding MSP figures announced each year, only a tiny section of Indian farmers benefit from the price-support mechanism. According to the HLC report, just 6% of farmers sell their produce to state-run procurement agencies.