CCEA clears new formula for MSP

Written by Commodities Bureau | Mumbai | Updated: Jan 17 2009, 04:38am hrs
After a wait of more than four years, the government Thursday approved changes in the items to be included as costs incurred by the farmers while calculating the minimum support price of agricultural commodities as recommended by the YK Alagh committee.

The changes when brought into force will include premium paid by farmers on crop insurance, marketing and transport charges and also quality aspect of the produce while determining the cost of production for determining the minimum support price.

At present, the cost of production of agricultural produce for calculating MSPwhich is also de-fact procurement price for foodgrainsis determined largely on the basis of input-output price parity, demand and supply, inter-crop price parity, effect on industrial cost structure, effect on cost of living, effect on general price level, effect on cost of living and international price situation among host of other criterions. Experts said the current changes when implemented would factor in the different other costs that farmers incur while producing his crop and make the assessment more realistic. The cabinet committee on economic affairs in a meeting also authorised the commission for agriculture costs and prices (CACP), the nodal agency the fixes the MSP for various crops to ascertain the actual spread of expenditure vis--vis borrowings during the crop season for assessing the interest burden on farmers. It also approved creation of a technical committee to look into the existing survey schedule for cost studies and it will be modified, if necessary. Under the revised terms of reference the CACP hasnt been given statutory status, as was being demand by many. The government also restrained the commission from adopting long-range marginal cost principle for analysis and development pricing and economic policies for fixing MSP. It also refrained CACP from upward revision of the tariff rate on edible oil and additional protection for cotton beyond the WTO bound rate.

The Cabinet also accepted some of the recommendations of the Alagh committee which are already in place, these include promoting commodity exchanges in various parts of the country and considering using NCDEX and other networks for informed analysis and as a policy instrument in its working, restructuring procurement agencies such as FCI, Nafed, CCI and JCI and delineating responsibilities of national nodal agencies and the concerned State Governments for effective price support operations and amending the APMC Act to increase the involvement of private sector in development of marketing infrastructure and to sensitise the key stakeholders along with others.

Other decisions

Approval of the Plan Scheme Investigation of Water Resources Development Schemes

Delinking of pay scales of scientific workers (faculty) in the Indian Statistical Institute (ISI) Kolkata from the UGC pay scales and bring them at par with those in the Indian Institute of Science, Bangalore

Creation of 1 post of joint secretary in pay band 4 (Rs 37,400-67,000 +grade pay of Rs 10,000/-pm) in department of pharmaceutical

Four-laning of Cuddapah-Mydukur-Kurnool section in Andhra Pradesh

Four/ six laning of Walayar-Vadakkancherry-Thrissur section in Kerala