Minimum Support Price of Paddy Hiked by Rs 50/Quintal

The minimum support price or MSP of paddy was raised by the Cabinet Committee on Economic Affairs (CCEA) on Wednesday.

The CCEA approved a proposal to raise the MSP of paddy by Rs 50 to Rs 1,410 per quintal for this year. The superior variety of paddy was also increased by Rs 50 to Rs 1,450, the said.

The Cabinet also approved a bonus of Rs 200 per quintal on pulses.

Saugata Bhattacharya, chief economist of Axis Bank told NDTV that the hike in MSP is politically generous and economically rational decision.

"The hike balances the need to control inflationary pressures and it is a good, middle path that the government has chosen," he added. The hike is lower, but we have to recognize that at this time last year, input prices were still high, Mr Bhattacharya said.

Ashok Gulati, former chairman of Commission for Agricultural Costs and Prices, said the  government could have been a little more liberal, and MSP could have been hiked more.

MSP is the minimum price set by the government at which the farmers' produce is procured by the Food Corporation of India (FCI).

Paddy is the main crop grown in the kharif (summer) season. Sowing of kharif crops has already started with the onset of the South-West monsoon from June.

The Agriculture Ministry had moved a CCEA note on MSP of various crops for the 2015-16 kharif season taking into account the recommendations of the Commission for Agricultural Costs and Prices (CACP), a government advisory body.

The government last year increased the minimum support price of paddy by Rs 50 per quintal to Rs 1,360 to encourage farmers to cultivate rice.

For the crop year 2016, the hike is at 3.6 per cent compared to a 3.82 per cent hike last year. In percentage terms there has been a steady decline in the MSP hike over the years, except for the crop year 2011 when there was no hike. The last double digit hike took place for the crop year 2013, when the government hiked MSP by 15.74 per cent.

(With PTI inputs)