Ahead of polls, govt hikes MSP for winter crops

NEWDELHI: Ahead of the Rabi sowing season and assembly elections in the largely rural states of Gujarat and Uttar Pradesh, the Centre on Thursday announced an increase in the minimum support price of wheat by ₹110 – the biggest in six years – and between ₹200 and ₹400 for pulses and oilseeds.

MSP is the rate at which the government agencies buy farm produce from cultivators. Agriculture minister Radha Mohan Singh tweeted the new MSP rates in the evening with the message that the “government has substantially increased” them.

Experts said that the increase is not likely to increase food prices but neither will it boost agriculture growth enough to offset the poor monsoon rains in several parts of India and lower (by around 2.5%) sowing in the Kharif (rainy) season.

“To cover for a drop of 2.8% in the kharif season, you need a boost of around 5% in the Rabi season. I don’t see that happening,” economist Dr Himanshu said.

The agriculture growth rate last year was 4.9% achieved on the back of a good monsoon that followed two drought years. This year, experts expect the growth rate to drop, with even the government think tank Niti Aayog pegging it around 3%.

The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi increased the MSP of wheat from ₹1,625 last year to ₹1,735 a quintal.

MSP for other winter sown crops was also increased.

Ministry officials said that the announcement, coming just ahead of the sowing season, will encourage the cultivation of crops like gram and masoor, whose MSP was raised by ₹200 per quintal each to ₹4,200 and ₹4,150 respectively.

The hikes are in line with the recommendations of the Commission for Agricultural Costs and Prices, an expert body under the ministry.

The procurement prices for oilseeds, rapeseed/mustard and safflower seed has also been increased substantially, with the new prices ranging between 8% to nearly 11% over last year’s.

“Unless the announcement is backed by the government’s intention to intervene in the market, it won’t change much,” Dr Himanshu added.