A day after farmers march to Delhi, MSP for major rabi crops raised by 5-6%

A day after thousands of farmers from northern states marched towards the capital to press various demands, the Union Cabinet decided to raise the Minimum Support Price (MSP) of rabi crops for the 2018-19 season. 

The MSP for wheat was increased by Rs 105 a quintal, up 6.1 per cent from 2017-18, to Rs 1,840. Wheat, along with chana (chickpea) and mustard, is majorly cultivated by farmers in North India, particularly in Uttar Pradesh, Madhya Pradesh, Punjab, Haryana and Rajasthan -- all of which have seen big farmer protests in recent months. Low remuneration from agriculture due to a relative fall in prices has been one of the main grouses of growers.  

However, how far the increase would assuage farmers remains to be seen. In many crops, the MSP increase is lower than the rise in production cost.   

The MSP of mustard was increased by Rs 200 a quintal, five per cent more than 2017-18, to Rs 4,200, while that of chana was increased by Rs 220 a quintal, five per cent more than 2017-18, to Rs 4,620 a quintal. The MSP of masur (red lentil) was raised by Rs 225 a quintal, 5.3 per cent more than 2017-18, and that of safflower was raised by Rs 845 a quintal, 20.6 per cent more than in 2017-18. Barley's MSP has been raised by Rs 30 a quintal, 2.1 per cent more than 2017-18, to Rs 1,440 a quintal. 

The increase in MSP for both the rabi and kharif seasons would, the government estimates, lead to an additional income of Rs 626 billion in farmers' hand. According to an official statement, the MSP of wheat is now 112 per cent more than the cost of production (A2+FL, in official parlance, or actual paid out cost plus imputed value of family labour), estimated at Rs 866 a quintal. The MSP of chana was 75.2 per cent more than the A2+FL cost, while that of mustard was 89.9 per cent more.  

"The hike in wheat MSP is more or less on expected lines and, in fact, is lower than the hike in rice MSP of almost 10 per cent more than 2017-18. In that respect, the current increase is more moderate. How these will impact inflation depends on how much the government procures," Madan Sabnavis, chief economist at CARE Ratings, told Business Standard.

On Tuesday, thousands of farmers marching towards Delhi as part of the Bhartiya Kisan Union's 'Kisan Kranti Padyatra' were stopped at the border with UP, leading to clashes and police use of water cannon and teargas.

The padyatra, which commenced on September 23, started from Haridwar's Baba Tikait Ghat, named after the once-famous farmer leader of western UP, Mahendra Singh Tikait. It passed through the main sugarcane and wheat belts of western UP, including Muzaffarnagar and Meerut, before reaching Ghaziabad on Monday.  

The farmers are demanding lower petrol and electricity bills, legal status to the MSP mechanism and its full implementation in line with the Swaminathan Committee's recommendation of 50 per cent over C2 or the comprehensive cost, including imputed rent and interest on owned land and capital. Also, they are demanding full waiver of all crop loans, changes in Kisan Credit Card norms, and directing the National Green Tribunal to lift the ban on the use of diesel vehicles more than 10 years old in the National Capital Region, which would affect farmers who use tractors.  

The government has assured that several of these demands would be addressed and has formed a panel under Union Minister of State for Agriculture Gajendra Singh Shekhawat. Subsequently, the agitation was called off earlier on Wednesday.  

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