Government increases Minimum Selling Price (MSP) of 14 Kharif Crops

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The Cabinet Committee of economic affairs and their meeting recently has addressed and approved the MSP (Minimum selling price) of almost 14 kharif crops. The increment from Rs 200 to Rs 1750 per quintal has increased food subsidy bill over Rs 11,000 crore. This year in February, the government had announced that the MSP of 14 notified kharif crops will be fixed at least 1.5 times higher than the production cost.

Mr Narendra Modi had met Agricultural Minister, Raja Mohan Singh on Tuesday 3rd of July. They had discussed, with the Niti Aayog to give final shape to the long promised move of providing at least 1.5 times of the production cost to the farmers.

There were also discussion regarding the financial implication of the proposed procurement mechanism — to ensure that farmers get MSP — if market prices fall below the government’s benchmark rate. According to the reports of the senior officials of Niti Aayog made a presentation before the Prime Minister on the proposed procurement mechanism and its financial implication.

The implementation and planning despite occurring at a central level will eventually permeate to a state level. Then depending on the local conditions and procure through their own state agencies or any other private agency authorised by states. States will be responsible for procurement and liquidation of the procured commodity. The Centre will compensate only on the operational loss.

States are also allowed to empanel over the digital medium and involve the private industries. This suggestion was frequently discussed by the the Niti Aayog too. The private companies are allowed to bid on the produce once it falls below the MSP.

India is estimated to have harvested a record food grains production at 279.51 million tonnes in the 2017-18 crop year (July-June) on all-time high output of rice, wheat, coarse cereals and pulses.

The Food Corporation of India (FCI), the government’s nodal agency for procurement and distribution of food grains,. It buys wheat and rice from farmers at the MSP and supply grains to the farmers under the food security law. Paddy is the main kharif crop and and the sowing of such a crop begins with the onset of southwest monsoon.


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