He said the agriculture ministry has proposed an increase of Rs 60 per quintal in the minimum support price (MSP) of common paddy varieties to Rs 1,310 for the current crop year through June 2014, in sync with the recommendations made by the Commission for Agricultural Costs and Prices (CACP). The MSP of grade A paddy variety is sought to be increased by Rs 65 to Rs 1,345 per quintal. The CACP recommends the MSPs of different crops to the agriculture ministry.
Analysts said although the hike in the MSPs is inevitable, it would drive up food inflation as well as the food subsidy bill, especially if the government intends to implement the food security Bill. Wholesale food inflation in May rose to 8.25% from 6.08% in the previous month after the price rise in rice hit this year's highest at 18.48% and wheat rates advanced 12.65%, while the headline inflation was at 4.7%.
The agriculture ministry is also seeking an increase of up to Rs 450 in the MSPs of pulses and oilseeds to boost their production and cut reliance on imports. India imports more than half of its annual edible oil requirements and one-fifth of its pulse needs.
The farm ministry wants the MSP of bajra be increased by Rs 135 to Rs 1,310 per quintal, although the CACP had suggested to keep its price unchanged at Rs 1,175 per quintal during 2013-14. The ministry is seeking a Rs 135 hike in the MSP of maize at Rs 1,310 per quintal, although it wants the MSP of ragi and jowar unchnaged at last year's level of Rs 1,500 per quintal each.
The ministry has proposed a Rs 450 increase in the MSP of tur at Rs 4,300 per quintal despite the reservations by the CACP, which wanted it to remain at the 2012-13 level.
The ministry has also suggested a Rs 100 rise in the MSP of moong at Rs 4,500 per quintal, while it accepted the CACP's view on urad and proposed to keep the MSP unchanged at Rs 4,300 per quintal for 2013-14.
For oilseeds, the ministry has suggested Rs 320 increase in support price of soyabean (yellow) to Rs 2,560 per quintal and Rs 300 jump in MSP of soyabean (black) at Rs 2,500 per quintal.