The Hindu Business Line : Govt yet to announce minimum support price for kharif crops

Mumbai, May 20 Today is May 21. Under normal conditions, the South-West monsoon should break over Kerala coast in about 10 days; and there are indications the onset may bea few days earlier.

Pre-monsoon sowing of crops like groundnut has already commenced in some parts of the country.

Farmers are waiting for manna from the heavens.

Yet, there is no sign of the announcement of minimum support price (MSP) for kharif 2008 crops.

Given unabated inflation, the country cannot afford a poor agricultural performance in 2008-09.

Farmers need all the support and in good time.

What’s holding the Government back is unclear.

It is of course not unusual for this Government to delay the MSP announcement.

Last year, the decision was cleared by the Cabinet Committee on Economic Affairs on May 17.

In 2006, the decision on MSP was made as late as July 28 when most of the planting was over and crops were well into the growing cycle.

Such delayed announcement of MSP serves little purpose.

In 2005, the Government announced MSP for kharif crops a tad too soon – on April 21.

It was still early days for the Government; and New Delhi was perhaps keen to demonstrate its commitment to agriculture.

No deadline

It is clear from the above that there is no deadline or cut-off date for announcement of MSP. Left at the mercy of the Government, agriculturists cannot plan what crops to raise.

Reports circulating in the market suggest the Government is seriously considering a massive hike in MSP for various crops.

There is already a demand for raising paddy MSP to Rs 1,000 a quintal in line with wheat.

With elections round the corner, it should surprise no one if the Government decides on a hefty rise in MSP for various kharif crops such as rice, coarse grains, pulses, cotton and oilseeds.

However, an abnormal increase in support price unrelated to production costs is undesirable and would lead to an inflationary spiral.

While MSP is necessary to comfort the growers against the risk of falling farm gate prices, it is hardly the instrument that would help raise production or productivity.

Related measures

Unless accompanied by a series of related measures including input supplies and water management, higher MSP alone is most unlikely to automatically translate to higher output.

Moreover, there is nothing to suggest that the Centre and various State governments are in a state of readiness to draw benefit from a forecast of normal monsoon.

While growers have every right to expect market determined prices, an abnormal hike in MSP – with elections in mind – may prove counter-productive by pushing food prices higher, without guarantee of a corresponding increase in output.

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