The Hindu Business Line : Wheat MSP to be fixed at Rs 700 per quintal

"The Agriculture Ministry has already circulated the note to the concerned Ministries (mainly Finance and Commerce) and it is likely to be taken up by the Union Cabinet in the coming week," officials told Business Line.

Steepest hike

The proposed Rs 700 per quintal rate is in line with what the Commission for Agricultural Costs and Prices (CACP) had also recommended, they added.

For 2005-06, the MSP had been pegged at Rs 650 per quintal. If the Rs 50 per quintal proposed increase goes through, it would mark the steepest hike in the MSP since 1998-99, when it went up by a hefty Rs 95 per quintal. The last five years have, by contrast, seen the annual rise in wheat MSP being contained within Rs 10 per quintal. This trend is now set to change for the crop that would be planted from around the middle of this month.

Bonus

Of course, there have been years when effective procurement prices have been higher due to the Government granting bonuses over and above the MSP. The Rs 475 per quintal procurement price for 1996-97 (against Rs 380 in the previous year) was inclusive of a Rs 60 bonus. Similarly, the Rs 510 per quintal rate for 1997-98 comprised an MSP of Rs 455 and a bonus of Rs 55.

Even for the 2005-06 crop, the Government had declared a Rs 50 per quintal bonus over and above the MSP of Rs 650. But it was announced as late as April 21, by which time procurement operations had virtually come to an end. As a result, total wheat procurement for the Central pool, at 92.23 lakh tonnes (lt), hit a 10-year-low.

"This time, nobody wants to take any chance and so it is proposed to straightaway offer a Rs 50 per quintal MSP hike to encourage farmers to sow. Any further bonus can be considered depending upon prices during the harvest time," the officials said.

The downside to this though is that unlike bonus — which is, strictly speaking, a one-time payment — a hike in MSP tends to be permanent and is not amenable to any rollback under changed market conditions.

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