Modi government approves hike in MSP for Kharif crops

The Cabinet has approved a steep rise in the minimum support price of crops, giving farmers the promised 50% return on input costs, a politically astute move that can ease farm distress and boost rural demand if implemented effectively, but it can also stoke inflation.

The biggest increase in MSP, about 40-50%, is for coarse grains that are planted by the poorest farmers, mostly in unirrigated areas. About a quarter of India’s area under such crops is in poll-bound Rajasthan, with the rest split between several states including Maharashtra, Karnataka, Uttar Pradesh, Odisha, Andhra Pradesh and Madhya Pradesh.

The government said the “historic” Rs 15,000-crore move fulfilled the promise made in this year’s budget that MSPs would be determined on the principle that the harvest should get the farmers 150% of the cost of planting and tending to the crop. Arun Jaitley, who promised higher MSP in his budget speech.

The Congress party reacted saying farmers were facing much higher costs than what had been considered. “BJP knows that the elections are coming and as they have not done anything for farmers they have increased the minimum support price at the end of their government session, which is again ‘one more jumla.

Farmers planting coarse cereals, oilseeds, and pulses which are grown in dryland and the rainfed area will gain a lot with this increase in MSP by at least 150% cost of production. It will help more than 50% of Indian farmers.

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