New Delhi: The Centre mulls spend up to `15,000 crore to protect minimum support prices that are to be announced at 150% of the input costs for crops, including paddy, coarse grains and some pulses. The decision is likely to be taken at the Cabinet meet Wednesday.
The exact mechanism the government plans to use to ensure the MSP is protected will become clear Wednesday, a senior bureaucrat revealed Tuesday.
The new MSP regime translates into support prices that are 1.5 times the input costs – costs incurred by farmers towards cultivation – so that farmers get 50% returns. The decision to offer higher support prices for the kharif season was first announced in the Budget for 2018-19 fiscal.
MSPs are announced twice a year, at the beginning of rabi (winter) and kharif (summer) sowing seasons. MSPs are likely to significantly go up in a range of crops. In the 2017-18 crop year, returns to farmers were below 50% of the costs of cultivation in most crops.
A key reason for the current distress is that farmers have failed to get even MSPs for their produce. In kharif 2017, net margins (difference between market price and production cost) were negative in many crops. The mechanism under which the government plans to spend up to `15,000 crore is aimed at ensuring that this doesn’t happen this season.