The Union government on Thursday announced an interim hike in the minimum support price (MSP) of paddy by Rs 105 per quintal to Rs 850 per quintal for the coming kharif season.
The Cabinet Committee of Economic Affairs (CCEA) also referred the recommendations of the Commission for Agriculture Costs and Prices (CACP), which had proposed a higher MSP for paddy, to the Prime Minister?s Economic Advisory Council.
The CACP, government?s nodal agency that fixes the minimum support price of farm commodities, had recommended a hefty Rs 1,000 per quintal MSP for general grade paddy, up Rs 255 from the current Rs 745 per quintal.
The recommendations of the CACP has been referred to the Economic Advisory Council because of the differences between states over the MSP of paddy.
?There was a wide variation in paddy MSP demanded by different state governments and hence we have decided to refer the issue to the Economic Advisory Council for a final view,? finance minister P Chidambaram told reporters after the CCEA meeting.
He said states such as Madhya Pradesh, Rajasthan and Himachal Pradesh have demanded an MSP that was lower than the CACP recommendations, while those like Andhra Pradesh demanded an MSP that was higher than the CACP recommendations.
On the MSP for superior grade paddy, Chidambaram said that the agriculture ministry would announce the new MSP after adding Rs 25 to Rs 30 on the new MSP of common grade paddy.
The CACP had proposed a hike of Rs 325 per quintal in MSP for grade ?A? paddy to Rs 1,005 per quintal. The current MSPs of both rice grades includes a Rs 100 per quintal bonus announced in October.
The government also deferred its decision on MSP for all other crops grown during the kharif-sowing season because of their already high price in the spot markets.
?There is no urgency to increase the MSP for other crops as their current market price is quite high,? Chidambaram said.
The CACP recommended increasing maize MSP to Rs 840 per quintal, from Rs 620 per quintal.
The MSP for arhar (pigeonpea) was proposed at Rs 2,000 per quintal, up from the Rs 1,590 per quintal. The MSP for urad (black gram) was proposed at Rs 2,520 per quintal, up from Rs 740 per quintal.
For soybean, the MSP for black and yellow varieties was proposed at Rs 1,350 per quintal.
For cotton, the CACP recommended an MSP of Rs 2,500 to Rs 3,000 per quintal.
Interestingly, the agriculture ministry had accepted all the recommendations of the CACP, but waited for a final nod from the finance ministry.
Agriculture minister Sharad Pawar said recently that the government had done enough for wheat farmers by raising the MSP to Rs 1,000 per quintal and now it was the turn of the paddy cultivators to reap benefits of a bumper output. India?s rice production in the marketing year that ends June is expected to be on an all-time high of around 97 million tonne.
Sources added that the government?s tight financial position could also have been a reason for a small increase in paddy MSP.