MSP for pulses hiked up to Rs 700/qntl despite surging prices

Surging prices notwithstanding, the government today hiked the minimum support price of pulses by up to Rs 700 to a maximum of Rs 3,170 a quintal but support for paddy has been increased by a meagre Rs 50 a quintal.

The MSP for pulses, considered to be the wholesale market benchmark, is just about 30--50 per cent of retail prices of some varieties like moong, urad and arhar that are being sold for up to Rs 100 a kg in retail market.

A decision for raising MSP of kharif crops for 2010-11 was taken at a meeting of the Cabinet Committee on Economic Affairs, chaired by Prime Minister Manmohan Singh.

An agriculture ministry official later explained that higher MSP was meant as an inducement to farmers to go for increasing the acreage for cultivation of pulses, for which India is a net importer and the sharp rise in prices is on account of higher commodity prices globally.

The highest increase was given for the widely consumed arhar dal (tur), the MSP for which has been increased to Rs 3,000 a quintal from Rs 2,300 last year.
The MSP for moong, another popular variety, has been increased to Rs 3,170 per quintal from Rs 2,760. Support price for urad has been increased to 2,900 a quintal from Rs 2,520 last year.

"The hike in MSP for arhar is Rs 200 more than what the Commission for Agricultural Costs and Prices had recommended considering the importance of this
pulse," an official said.

Arhar dal prices had skyrocketed to about Rs 100 a kg a year ago and even now it is ruling above Rs 70 a kg. Moong is selling above Rs 100 a kg in the retail market.

India is a net importer of pulses despite being the largest producer. The country produced 14.77 million tonnes in 2009-10 against a requirement of 18-19 million tonnes.

Unlike in the case of paddy and wheat, the government does not procure pulses from farmers, but it intervenes if prices fall below the MSP.
The MSP for paddy (common variety) has been increased to Rs 1,000 per quintal from Rs 950 last year, while the new MSP for Grade A variety stands at Rs 1030 per quintal from Rs 980.

However, the net benefit to farmers will be nil as they were given a bonus of Rs 50 per quintal last year over an above the MSP. The government may announce bonus later when procurement starts in October.

The food inflation for the week-ended May 29 stood at 16.74 per cent and the government has been devising ways to tackle it.