Increase in the support prices. Rabi crop MSP hiked by 2-9%, may help contain inflation

The Centre has fixed the minimum support price (MSP) of wheat at ₹2,125 per quintal, an increase of 5.5 per cent over the previous year amid a 17 per cent jump in retail inflation of the cereal in September. Though the new MSP is higher than the average price received by farmers in the peak season last year, it is still lower than the current rates, and if the rates continue at this level, the government procurement may again miss the target.

Announcing the 2-9 per cent hike in MSPs of six rabi-grown crops after the cabinet approval, Information and Broadcasting minister Anurag Thakur said that the increase in the support prices has been in line with the government’s policy to make it a minimum 50 per cent over the cost of production and the new price is as high as 104 per cent in mustard and 100 per cent in wheat over their respective costs of production.

Thakur also said that the Modi government had raised the MSP of wheat by more than 50 per cent during the last nine years. The cost of production of wheat is estimated at ₹1,065 per quintal.

Among other rabi crops, the MSP for chana (gram) has seen the lowest 2 per cent increase to ₹5,335/quintal, whereas masur (lentil) has got the hiest 9 per cent raise to ₹6,000/quintal. Mustard MSP has also been fixed higher by 8 per cent at ₹5,450/quintal and safflower by 4 per cent at ₹5,650/quintal. Barley MSP has been raised by 6 per cent to ₹1,735/quintal.

The government could purchase 18.79 million tonnes (mt) of wheat from the crop grown in 2021-22 crop year (July-June), though it maintained that the production fell by only 2.75 mt to 106.84 mt from the previous year. The target was to procure 44.4 mt. The lower purchase led to a continuous price rise even though export was banned in March.

“Reduction in wheat procurement was due to increase in market price and demand-supply mismatch on account of geopolitical situation,” Food Secretary Sudhanshu Pandey had said on October 17. He admitted that the market prices of wheat remained continuously higher than the MSP throughout the procurement period across the country. But, farmers could reap higher remuneration for their produce which is the main objective of the policy of the government, he added.

Though sowing of wheat is yet to start, the government is betting on average production because of “fairly good rainfall” in the country and expects procurement next year to be normal, too.

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