The Hindu Business Line : Rs 100 a quintal bonus payment likely for paddy

The Centre is all set to announce a bonus for paddy over and above the already declared minimum support price (MSP) payable in the current 2008-09 marketing season (October-September).

Decision on quantum

According to official sources, the Food Ministry has recommended the bonus at Rs 50 a quintal. “But the chances are it would eventually be Rs 100, taking the effective procurement price closer to the Rs 1,000 level demanded by the Governments in major paddy growing States,” they told Business Line.

A final decision on the quantum of bonus is expected to be taken at the next meeting of the Union Cabinet. While the Cabinet normally convenes every Thursday, this time it may be deferred due to Gandhi Jayanti (a national holiday) on the same day.

Procurement prices

Earlier, on June 12, the Cabinet had fixed an ad hoc MSP of Rs 850 a quintal on ‘common’ paddy and Rs 880 a quintal on Grade ‘A’ varieties to be procured in the 2008-09 season.

Although these were below the Rs 1,000-1,050 range recommended by the Commission for Agricultural Costs & Prices (CACP), they still worked out Rs 105 a quintal higher than the effective procurement prices of Rs 745-775 a quintal for 2007-08.

Price parity

But with States such as Punjab and Andhra Pradesh not satisfied with the announced rates — their argument being that the fixation of a Rs 1,000 a quintal MSP on wheat had disturbed the existing inter-crop price parity — the matter was referred to the Prime Minister’s Economic Advisory Council.

The latter apparently refrained from suggesting any additional price increase.

“A decision has, nevertheless, been taken now to declare a bonus above the ad hoc MSP. Whether it is going to be Rs 50 or Rs 100 will depend on what final call the Cabinet takes”, the sources added.

Procurement

During the just ended 2007-08 season, Food Corporation of India (FCI) and State agencies procured a record 279 lakh tonnes (lt) of rice. As on October 1, estimated stocks in the Central pool, at 64.52 lt, stood above the normative minimum buffer of 52 lt for that date.

Kharif output

Further, the Agriculture Ministry has projected an all-time-high kharif output of 832.5 lt for 2008-09.

“Although the current stocks and availability position is comfortable, the Centre’s major consideration is to build a strategic rice reserve of 20 lt (over and above the buffer) from this year’s harvest similar to the 30 lt created earlier for wheat.

Given the volatile global supply situation — more so for rice — it does not want to take any chances and, hence, the bonus is inevitable”, the sources noted.

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