Hike in Kharif MSP to cost Narendra Modi government Rs 33,500 crore more, decision likely today

The Modi government plans to announce a sharp increase in the minimum support price (MSP) of all Kharif crops for the 2018-19 crop season, and the upward revision is likely to burden the exchequer by an additional Rs 33,500 crore, according to a media report. The Centre could increase the MSP  of paddy, the key Kharif crop, by 13 percent to Rs 1,750 per quintal for the 2018-19 crop year. The MSP of the other 13 Kharif (summer-sown) crops are also expected to be increased sharply, they said. According to  The Times of India, the new MSP, to be considered by the cabinet on Wednesday, will largely apply to paddy and pulses but will also benefit ‘nutri-cereals’ like millets the most. The added cost of the MSP is 0.2% of GDP, according to the cabinet note, the newspaper said. [caption id=“attachment_4407437” align=“alignleft” width=“380”] Representational image. PTI[/caption] According to sources, the union government has delayed the announcement of the MSP for Kharif crops, the sowing of which has already begun, as it was weighing whether to take such a big political decision considering the huge financial burden on the exchequer. The agriculture ministry has proposed a higher rate than what has been recommended by government advisory body CACP, considering growing farm distress because of a fall in prices of most crops owing to bumper production, sources told the newspaper. Prime Minister Narendra Modi on Tuesday discussed the financial implication of the proposed procurement mechanism to ensure that farmers are handed out a MSP if market prices fall below the government’s benchmark rate. In his Budget 2018 speech, then finance minister Arun Jaitley had announced that think-tank Niti Aayog in consultation with central and state governments will put in place a fool-proof mechanism to ensure farmers receive the benefit of the minimum support price (MSP). According to sources, senior Niti Aayog officials made a presentation before the prime minister on the proposed procurement mechanism and its financial implication. With inputs from PTI