Centre announces hike in MSP for paddy, pulses, oilseeds

#GS3 #ECONOMY #MSP 

Context:

The cabinet Committee on Economic Affairs (CCEA) has hiked the minimum support price (MSP) for common paddy to 1,940 a quintal for the approaching Kharif season.

centre-announces-hike-in-msp-for-paddy-pulses-oilseeds

Background:

  • The announcement comes at a time when farm unions are protesting for over six months.
  • Demanding legislation to ensure MSP for all farmers for all crops, and a repeal of three contentious farm reform laws.

About MSP:

  • The MSP is that the rate at which the govt. purchases crops from farmers.
  • It is supported a calculation of a minimum of one-and-a-half times the price of production incurred by the farmers.

What is the Rationale behind the hike:

  • To encourage crop diversification.
  • Concerted efforts were revamped the previous couple of years to realign the MSPs in favour of oilseeds, pulses and coarse cereals to encourage farmers to shift:  
  • To larger area under these crops,  
  • To adopt best technologies and farm practices and  

To correct the demand-supply imbalance.

  • The added specialise in nutrient-rich cereals is to incentivise its production within the areas where rice-wheat can't be grown without future adverse implications for groundwater table.
  • The increase in MSP for Kharif Crops for marketing season 2021-22 is in line with the Union Budget 2018-19.
  • According to which the MSPs at A level of a minimum of 1.5 times of the All-India weighted average price of Production (CoP), aiming at reasonably fair remuneration for the farmers

Price rise 

  • The hike is a smaller amount than 4% above last year’s price of ₹1,868.
  • MSP of paddy (common) has been increased from Rs 1,868 per quintal to Rs 1,940 per quintal for 2021-22 — a hike of Rs 72 per quintal.
  • Both tur and urad dal saw the MSP rise by ₹300, a 5% increase to ₹6,300 a quintal, while the highest absolute increase was for sesamum, whose MSP rose 6.6% to ₹7,307.
  • Groundnut and nigerseed saw a rise of ₹275 and ₹235 respectively.
  • However, maize saw a minimal hike of just ₹20 to ₹1,870 a quintal.
  • This year, the MSP for bajra was set at 85% above the value of production.  
  • The soyabean (yellow) MSP has been increased 1.80 per cent, up from Rs 3,880 per quintal to Rs 3,950 per quintal. Last year, the soyabean MSP increased by 4.58 per cent.

what are the Impact of hike:

  • The MSPs for the remaining crops were mostly set round the stipulated 50% above the value of production.
  • The expected returns to farmers over their cost of production are estimated to be highest within the case of bajra (85%) followed by urad (65%) and tur (62%).

Concerns:

According to the farmers union, it didn't account for the complete cost of production to stay pace with inflation.

There is no mechanism that guarantees that each farmer can get a minimum of the MSP because the floor price within the market.

 

SOURCE: THE HINDU 

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