PADDY MSP HIKED BY ~53/QUINTAL

The Centre on Monday raised the minimum support price (MSP) of common grade paddy for the 202021 crop season by a nominal 2.92 per cent compared to 2019-20 as it grapples to keep its burgeoning food subsidy under control.

The increase in MSP of paddy along with some other kharif crops was the lowest hike in the last five years. A bigger increase in MSP for paddy would have further jeopardized the food subsidy calculation for 2020-21 which is already looking shaky due to extra grain purchases and additional release through the public distribution system (PDS) due to the Covid-19 crisis.

The food subsidy for 2020-21 has been budgeted at over ~250,000 crore, which includes an estimated ~136,600 crore borrowings from the National Small Savings Fund. A higher MSP for paddy pushes up the economy cost, thus affecting the subsidy math. “Based on recommendations of the Commission for Agricultural Costs and Prices, the Cabinet approved the MSP of 14 crops. Paddy (common) MSP has been increased to ~1,868 per quintal for this year,” Agriculture Minister Narendra Singh Tomar said.

He addded that the increase in support price of paddy would ensure 50 per cent returns over the cost to farmers. According to government calculations, the expected returns to farmers over their cost of production are estimated to be highest in case of Bajra (83 per cent) followed by urad (64 per cent), tur (58 per cent) and maize (53 per cent).

For the remaining crops, returns to farmers over their cost of production is estimated to be at least 50 per cent. But farmers said barring paddy and to some extent pulses and oilseeds, most crops for which the government sets the MSP are not procured by it.

“The Centre is only indulging in window-dressing or attractively packaging a bundle of lies. The MSP announced for paddy is not even 3 per cent higher than last year though the cost of cultivation has drastically escalated. The CACP’S cost calculations are questionable and weighted average costs are arrived at by making drastic undervaluation. They are nowhere near the actual costs,” the All-india Kisan Sabha said.

Punjab Chief Minister Amarinder Singh termed the paddy MSP hike ‘shamefully woeful’. Punjab is one of India’s largest paddy producers.

Siraj Chaudhury, managing director of the National Collateral Management Services, said it was good that the Centre raised MSP. However, a bigger question is how far the farmer will get benefit of it, especially in those crops where the government is not a big buyer, he asked.

Citing the example of maize, Chaudhury said while the MSP for 2019-20 was set at ~1,760 a quintal, the crop in most of the months sold barely at ~1,200-1,300 a quintal in most markets.