To ease the promise made in the budget and to discontinue resentment among the farmers, the government is going to announce a new system for Minimum Support Price (MSP). Under this, farmers will get 50% profit margin at production cost. The central exchequer may have an additional burden of Rs 33,500 crore. In the meeting of the Cabinet Committee on Economic Affairs (CCEA), the support price of kharif crops has been approved today, which will be applicable mainly on paddy and pulses, but it will also benefit nutritious grain producers like Bajra. During the Budget Speech of 2018-19, Finance Minister Arun Jaitley had announced that in consultation with the Central and State Governments, the Commission will establish a better system which will ensure that the farmers get the full benefit of Minimum Support Price (MSP).
According to the cabinet note, the additional expenditure of the MSP is 0.2 percent of GDP. Paddy’s share of additional expenditure would be Rs 12,300 crore. Since the FCI buys wheat and rice only for distribution through Public Distribution System (PDS), the Government wants to establish a new system so that it can be ensured that the benefits of increasing the MSP of other crops can also be ensured for the farmers. The main crop of Kharif is paddy. The revised MSP will be 200 rupees more than the current Rs 1,550 per quintal. Last year, 3.8 million tonnes of paddy was procured. In some states, farmers are already getting 150 percent or more of the cost of production and this will not change. States like West Bengal, Assam and Maharashtra will benefit, where yield and productivity are low.
The maximum increase in the minimum support price (MSP) of fourteen Kharif crops has been done in Ragi. Its MSP has been increased by Rs. 900 to Rs. 2,700 per quintal. With this increase, the government’s treasury will suffer a burden of Rs 33,500 crore. The value of the increased MSP is 0.2 percent of GDP. Paddy’s share in additional expenditure is Rs 12,300 crore.
According to the proposal of the Policy Commission, the Market Assurance Plan (MAS) will be implemented by the State Governments, who will enter the market on the basis of local conditions and purchase through the state agencies authorized by their own private agencies or any other private agency. On the other hand, the price reduction procurement scheme has been made similar to the payment plan after the start of the Madhya Pradesh government.
Under this scheme, if the sale price model is below the cost, farmers will be compensated for the difference between MSP and actual value with certain conditions and limitations. The Policy Commission has also proposed a private sector participation in the MSP-affiliate procurement through a transparent e-market platform.