Centre ups paddy MSP by Rs 200

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New Delhi: The Centre Wednesday hiked the minimum support price for paddy by a record Rs 200 per quintal that will cost the exchequer over `15,000 crore and help fulfill its poll promise to give farmers 50 per cent more than their cost of production.
The decision, taken by the Cabinet Committee on Economic Affairs (CCEA) headed by Prime Minister Narendra Modi, comes less than a year before next general elections.
The previous highest hike in paddy MSP was `170 a quintal in the 2012-13 crop year. In the last four years, the NDA government has raised the paddy MSP between `50-80 per quintal.
While the BJP had promised in 2014 to give farmers a price of 1.5 times of cost, an announcement to give effect to the promise was made in the government’s fifth and final annual Budget presented February 1 this year.
Briefing about the CCEA decision, home minister Rajnath Singh said the Cabinet has approved the MSP of 14 kharif (summer-sown) crops for the 2018-19 season.
The government’s price advisory body Commission for Agricultural Costs and Prices (CACP) has calculated production cost of paddy at `1,166 per quintal and the government has raised the MSP of paddy (common grade) by `200 to `1,750 per quintal for 2018-19 season, he said.
The support price of Grade A variety of paddy has been raised by `180 per quintal to `1,770. The increase in paddy MSP is 50-51 per cent over its production cost.
“This will send a positive message to farmers and boost their confidence and end farm distress,” Singh said.
Terming it as a historic decision, the minister said the sharp increase in MSP was done after a lot of consideration and “not in hurry”. The hike in MSP will cost the exchequer over `15,000 crore, he added.
“This will increase the income of farmers and purchasing capacity, which will have impact on wider economic activity”.
Replying to queries on likely impact of MSP hike on price rise, Singh said, “We are concerned about inflation. It is not correct to say that inflation will go up.