Farmers to get 50% profit over input cost

In a decision with political ramifications in an election year, the Narendra Modi government yesterday approved a Minimum Support Price (MSP), providing farmers a profit of 50 per cent or more over “cost of production”, for 14 notified kharif crops for 2018-19.

The decision was taken by the Cabinet Committee on Economic Affairs (CCEA), chaired by the Prime Minister, and was welcomed by BJP leaders including party chief Amit Shah who called it “revolutionary”.

The Congress, however, called the decision an “electoral lollipop” and said the government had not made the MSP announcement on the basis of Commission of Agricultural Costs and Production (CACP) recommendations for 2018-19.

In his reaction through tweets, Modi called the decision “historic” and said he was delighted the government has fulfilled its promise to give MSP of 1.5 times on the input cost to farmers.

Addressing the media after the Cabinet meeting, Home Minister Rajnath Singh said farmers had never got MSP at 50 per cent over their input cost and the decision will have a “positive impact” on the economy.

He said the MSP will be based on “A2+FL” — one of the input cost concepts recommended by the M.S. Swaminathan Commission — and the Central government will spend an additional Rs150 billion (Dh8 billion) on account of the higher MSP. “No government in the history of independent India has given such hike in the MSP. It is not an ordinary decision. It will provide relief to farmers, who are in despair,” he said.

Besides widely-grown paddy, for which “the return over cost” is 50 per cent, it is 65.36 per cent for arhar (red gram), 62.89 per cent for urad and 97 per cent for ragi. Based on the CACPfixed input cost, which was Rs1,166 per quintal (100 kilogrammes), the MSP for paddy was increased by Rs200 (50.09 per cent) to Rs1,750 per quintal, while the “Grade A” paddy goes up by Rs180 (51.8 per cent) to Rs1,770 per quintal.