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Centre effects Rs 165-per-ql increase in wheat MSP

posted Nov 1, 2011, 5:22 AM by Puneet Goyal

The Government’s decision to fix wheat minimum support price (MSP) at Rs 1,285 per quintal for marketing season 2012-13 on Tuesday came after the States demanded hiking of MSP.

The States had asked for an increase at the 56th meeting of the National Development Council (NDC). The announced MSP marks an increase of Rs 165 per quintal over the last year’s MSP.

States echoed the farmers’ demand and asked for higher MSP of various agricultural produce. Chief Ministers of Haryana, Punjab, West Bengal, Himachal Pradesh and Andhra Pradesh particularly asked the Government to increase MSP, saying that input cost has greatly increased and the MSPs announced by the Government were not commensurate with farmers’ input cost.

Haryana CM Bhupinder Singh Hooda, who recently wrote a letter to the Prime Minister in this context and appealed to him to announce a bonus of Rs 200 per quintal over and above the MSP for the 2011 kharif season for all varieties of paddy, told The Pioneer on the sidelines of the NDC that he has asked the Government to implement his working group report which he had submitted to the Prime Minister a few months ago.

In the report, Hooda had suggested that the MSP should be input cost plus 50 per cent profit over it. He added that since land size is decreasing and input cost is increasing very fast, attractive MSP is must to sustain farmers’ interest in agriculture.

Punjab CM Prakash Singh Badal too raised the issue during the meeting and said that the proposed Rs 1,350 MSP for wheat is not acceptable and demanded Rs 2,200 MSP. Meanwhile, Andhra CM too demanded a hike of Rs 200 over the announced MSP of Rs 1,110.

West Bengal CM Mamata Banerjee too joined the chorus and told, “I have asked the Government to hike jute MSP to Rs 2,400. The present MSP is too low and farmers are distressed. State is paying them Rs 100 bonus, but that wouldn’t be enough.” The present MSP is Rs 1,700. Besides a hike in MSP, she asked for Rs 400 bonus also.

However, Commission on Agriculture Costs and Prices (CACP) chairman Ashok Gulati out rightly contested their demand and told The Pioneer, “It is not feasible to hike MSP to the extent they are asking. If we calculate MSP on MS Swaminathan formula (which Hooda has asked in his report), there would be a glut in the market of few crops. Also it will change the entire dynamics of market.”

The Government is in a bind on MSP. While Agriculture Ministry “reasonably” echoes farmers’ demand, Food Ministry is against any steep hike in MSP on account of high food inflation and resultant increase in subsidy bill of upcoming National Food Security Bill.

The Food Ministry is understood to have communicated its concern regarding steep hike in MSP to Finance Ministry and warned that this will result in high inflation. Recently, the Food Minister KV Thomas is understood to have opposed the Agriculture Ministry’s proposal to raise the support price of wheat to Rs 1,350 per quintal for 2012-13 from Rs 1,170 per quintal last year.

Some CMs also criticized the Government on its agricultural produce trade policy. They said that Government resorts to export ban to control domestic prices, which is anti-farmer. Farmers make profit only during a short period when the demand is at peak. Government’s intervention during such time deprives farmers of their fundamental right.

This included Congress-led states too. Maharashtra CM Prithviraj Chavan cited ban on onion and sugar exports and said that the Government must restrain from such anti-farmer measures in future. Similarly, Gujarat CM Narendra Modi slammed the Government on cotton ban, saying that it resulted in a loss of Rs 7,000 crore for farmers in his State.