Agri experts and farm bodies today said the hike in the minimum support price (MSP) of 2018-19 kharif crops would lead to inflation, widen fiscal deficit and hit badly the export of commodities like cotton, while others felt the raise in support price was insufficient.
"I commend the government for its efforts to help the farmers, but it will have many other repercussions," agriculture expert Ashok Gulati told PTI.
In absolute numbers, the paddy MSP hike by Rs 200/quintal to Rs 1,750 for this year is a record but not in percentage terms, he said.
Gulati cautioned that the sharp rise in cotton and rice MSP will hit exports badly and lead to increase in government procurement.
"The right policy instrument would have been income policy. The price policy has a limit if it goes beyond international prices. This will lead to accumulation of stock and hurt farmers even more," Gulati added.
Stating that the kharif crops' MSP announcement was a "small victory" for farmers, Swaraj India president and founder of Jai Kisan Andolan Yogendra Yadav said however, the support price fixed is not the rate the Prime Minister had promised in 2014 elections.
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"The price is also not computed at 50 per cent above the comprehensive cost (C2) being demanded by farmers' organisations," he said in a statement.
He said it is an immediate relief to farmers and not a permanent and stable solution.
"It is merely a promise, the fulfilment of which depends on government procurement and intensive support, something that has been lacking till now."
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