India approves 50% profit for farmers over input cost

New Delhi: In a decision with political ramifications in an election year, the Narendra Modi government on Wednesday approved a Minimum Support Price (MSP), providing farmers a profit of 50 per cent or more over “cost of production”, for 14 notified kharif crops for 2018-19.

The decision was taken by the Cabinet Committee on Economic Affairs (CCEA), chaired by the Prime Minister, and was welcomed by BJP leaders including party chief Amit Shah who called it “revolutionary”.

The Congress, however, termed the decision an “electoral lollipop” and said the government had not made the MSP announcement on the basis of Commission of Agricultural Costs and Production (CACP) recommendations for 2018-19.

In his reaction through tweets, Modi termed the decision as “historic” and said he was delighted the government has fulfilled its promise to give MSP of 1.5 times on the input cost to farmers.

Addressing the media after the Cabinet meeting, Home Minister Rajnath Singh said farmers had never got MSP at 50 per cent over their input cost and the decision will have a “positive impact” on the economy.

He said the MSP will be based on ‘A2+FL’ — one of the input cost concepts recommended by the M.S. Swaminathan Commission — and the Central government will spend an additional Rs150 billion (Dh8 billion) on account of the higher MSP.

“No government in the history of independent India has given such hike in the MSP. It is not an ordinary decision. It will provide relief to farmers, who are in despair,” he said.

Besides widely-grown paddy, for which “the return over cost” is 50 per cent, it is 65.36 per cent for arhar (red gram), 62.89 per cent for urad and 97 per cent for ragi.

Based on the CACP-fixed input cost, which was Rs1,166 per quintal (100 kilogrammes), the MSP for paddy was increased by Rs200 (50.09 per cent) to Rs1,750 per quintal, while for ‘Grade A’ paddy, it goes up by Rs180 (51.8 per cent) to Rs1,770 per quintal.

The year-on-year hike in the MSP for most other kharif crops this year is much higher than that announced on annual basis in last three years.

The government has decided 50.09 per cent of profit on the input cost of Rs1,619 per quintal of jowar (hybrid) thus fixing MSP at Rs2,340 per quintal. For jowar (Maladandi), the MSP will be Rs2,450 per quintal.

The MSP for bajra will be Rs1,950 per quintal — profit of about 97 per cent as the input cost calculated by the CACP was Rs990 per quintal.

For maize, the MSP was fixed at Rs1,700 per quintal — 50.31 per cent profit over the input cost of Rs1,131 per quintal. Arhar (tur) and urad saw among steepest price increase of 65.36 per cent and 62.89 per cent respectively, with MSP for arhar fixed at Rs5,675 per quintal over input cost of Rs3,432 per quintal and for urad at Rs5,600 per quintal over input cost of Rs3,438.

The MSP for ragi has been hiked by 50 per cent to Rs2,897 per quintal based on the input cost of Rs1,931 per quintal.

In the case of cotton, the MSP has been raised to Rs5,150 per quintal for medium staple (50 per cent profit) and to Rs5,450 per quintal for long staple (58.75 per cent profit).

The government has hiked the MSP by 50 per cent for groundnut at Rs4,890 per quintal, for moong at 6,975 per quintal, for sunflower Rs5,388 per quintal, for soybean at Rs3,399 per quintal, for sesame at Rs6,249 per quintal and for Niger seed at Rs5,877 per quintal.

Rajnath Singh also said the higher MSP will increase farmers’ income and purchasing capacity.

The hike in MSP for summer-sowed crops came amid concerns over farm distress and farmers agitations in different parts of the country.

The Union Budget for 2018-19 announced an MSP for crops providing at least 50 per cent returns on production costs in accordance with the BJP’s 2014 Lok Sabha election manifesto which promised farmers a minimum 50 per cent profits over the cost of production.

The Home Minister said the hike in MSP was in keeping with the Modi government’s aim to double farmers’ income by 2022.

He said new MSP includes all paid out costs such as those incurred on account of labour, rent, material inputs like seeds, fertilisers, manures, irrigation charges, depreciation on implements and imputed value of family labour.

The announcement came in the last year of Modi government and months before the crucial assembly polls in Hindi heartland states of Madhya Pradesh, Rajasthan and Chhattisgarh which will be followed by the Lok Sabha polls in April-May.

The Congress has been constantly raking up issues concerning farmers and talking of a farm loan waiver and the government has been keen to send out a positive message to the community that is politically significant across states.


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