The Union ministry of food and consumer affairs has opposed the agriculture ministry’s proposal to offer a bonus on commodities to growers along with fixing of the minimum support price (MSP) for kharif crops.
According to sources, the cabinet is expected to meet tomorrow to take a decision on the final MSPs of crops.
The prime minister’s office had much earlier ruled out any possibility of a bonus in addition to an MSP rise for crops. It had said a bonus could be considered if the MSP did not take into account any sudden increase in cost of production or any external factor not factored in by the CACP.
While the ministry of agriculture has supported the suggestions on MSPs by the Commission for Agricultural Costs and Prices (CACP), it is also firmly in favour of a bonus for crops, especially rice and pulses. The food ministry is staunchly against a bonus in at least those commodities where there is government procurement, such as rice for the kharif season. Sources said the CACP has recommended a 15 per cent rise in paddy MSP, above the general trend of eight to 12 per cent. The only exception was 2008-09, when the paddy MSP had gone up year over year by 32 per cent. Incentives are given to expand the stock of a commodity and India has a comfortable stock of rice, to the extent that we are net exporters of non-basmati varieties. More, the food ministry has raised a concern on storage of grain, where there is a big problem. A bonus along with a higher MSP for rice will mean over-production and a difficulty in stocking.
The ministry of finance has suggested to the agricultural ministry to use a mix of policies to push up production rather than having only MSP as a tool for farmers to raise production of a particular crop. It has suggested a more gradual approach to raising MSPs of kharif crops, rather than a steep rise which inflates the base, difficult to maintain year after year. The finance ministry’s concern, official sources said, was on the rising inflation and added burden on the already tight budgetary conditions.
While the CACP has proposed a 15-53 per cent rise across kharif crops, official sources said the increase could be sustained in the range of 10-25 per cent across crops, barring one or two where production needs to be enhanced or farmers have faced huge losses due to unfavourable weather conditions, as with groundnut.
As against a 15 per cent rise suggested for rice, the MSP may go up by 10-12 per cent. In millets, while the reported recommendations are for a 20-53 per cent rise, the highest being for jowar, the final MSP may be 20-22 per cent for both jowar and bajra and 10-12 per cent for maize.
Official sources said in edible oil, the MSP of only groundnut was likely to go up by 18-25 per cent. For sesame, sunflower and soybean, it will be 15-20 per cent, for pulses by nine to 25 per cent -- moong by 19-20 per cent, urad by 18-25 per cent and tur by nine to 12 per cent. For cotton, as against a recommended MSP of Rs 3,600-3,900 per quintal, the government may stick to Rs 3,200-3,500 across varieties, a change of 14-16 per cent over the current MSP of Rs 2,800-3,300 per quiltal.
