MSP hike may be a good decision Mr Modi, but what about these 2 issues plaguing farmers

By: | Published: August 9, 2018 5:41 PM

With an aim to ameliorate the long-standing rural distress and increase farmers’ income, government last month hiked the minimum support prices (MSPs) for 13 kharif crops by 15%.

MSP hike and farmersAs maximum retail price of urea is controlled by the government, hiked international fertiliser prices can’t be passed to farmers.

With an aim to ameliorate the long-standing rural distress and increase farmers’ income, government last month hiked the minimum support prices (MSPs) for 13 kharif crops by 15%. The decision has been much reported and analysed since then. Only time will tell if this decision bythe government has actually benefited the farmers or not, here’s is something that’s neutralising the MSP hike. Rising crude oil prices along with hardenting international rates of fertilisers are eating into the potential benefits for farmers of MSP hike.

Writing in The Indian Express Harish Damodaran says even though much has been written about rising crude oil prices, surging fertiliser prices have escaped attention. In 2016, cost plus freight price of imported urea was as low as $ 198.31 per tonne. It reached $ 207.81 per tonne in July and rose by 38% to $ 286.88 this year. This happened when rupee has been on a gradual decline, he writes.

As the maximum retail price of urea is controlled by the government, increased international fertiliser prices can’t be passed to farmers. The price is fixed at Rs 5,909.4 per tonne for neem-coated urea which includes 5% GST. However, for fertilisers in the decontrolled category, the prices this year are higher by 18-20% from last time, he writes.

This comes at a time when prices of diesel used in tractors have also surged by more than fifth. It is nothing less than double blow for the Indian farmers, he writes.

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