MSP for paddy hiked by Rs. 200

MSP for paddy hiked by Rs. 200

News:

1. The Union cabinet has increased the Minimum Support Prices(MSP) for kharif crops.

Important facts:

2. The decision was taken by the Cabinet Committee on economic affairs headed by PM Narendra Modi.

3. The MSP were announced for 14 commodities.

4. The government has increased MSP so that farmers will get 50% more than their ‘production cost’.

5. However, in percentage terms, this year’s MSP of Rs. 1,750 per quintal is only a 12.9% increase from last year’s MSP of Rs. 1,550 per quintal.

6. The government considers A2+FL’ as production cost.

7. A2+FL costs includes family labour, but not land costs.

8. However, some experts want comprehensive cost (C2) to be considered for MSP. C2 includes land costs. MSP based on C2 cost will be higher than the proposed figure.

9. The MSP increased so that they are 50% higher than the cost of production not including land cost.

10. Increased figures for different crops:

For paddy:

• Rs 200 per quintal increase in the MSP for paddy, which is likely to inflate the food subsidy Bill by over Rs, 15,000 crore.
• In 2008-09, the previous government had announced a 20.8% year –on- year hike in the MSP of paddy.
• The MSP of paddy has been increased 41% from 2014-18.
• Paddy is the major kharif crop and is directly procured from farmers by the Food Corporation of India.
• There is no guaranteed mechanism for procurement of more other crops.
• Apart from paddy major hike being seen in cereals such as bajra, jowar, ragi and cotton.

11. The hike in MSP will be beneficial in the following way:

• It will boost farmers’ income.
• Enhance purchasing capacity of farmers.
• Will have positive impact on wider economy

12. However several farmer outfits expressed their dissatisfaction over government’s decision because :

• According to some critiques if MSP had been announced on C2 basis, then paddy price would have risen by at least Rs 700 per quintal.