The govt on Wednesday hiked the Minimum Support Price (MSP) for paddy to Rs. 200 per quintal looking to fulfil its election manifesto promise of giving farmers 50 percent more rate than their cost of production.
The decision to boost Kharif crop purchase prices was arrived at the union cabinet meeting headed by Prime Minister Narendra Modi and comes less than a year before the 2019 general election.
The new price translates to 1.5 times of the present announced by Union Minister Arun Jaitley in Budget 2018 in February 1 this year.
The announcement of higher MSP coupled with the forecast of normal monsoon could turn out to be a rewarding year for farmers this year.
The flip side is a higher support price could result in food inflation.
The MSP of paddy (common) was Rs. 1,550 per quintal and Rs. 1,590 per quintal for paddy (grade A ) variety.
Other Kharif crops too have their support prices upped.The MSP of cotton (medium staple) has been increased to Rs. 5,150 from Rs. 4,020 and that of cotton to Rs. 5,450 from Rs 4,320 per quintal.