Centre today hiked MSP paid to farmers for paddy by a record Rs 200 per quintal and by up to 52 per cent in other summer-sown crops, seeking to address farm distress ahead of general elections slated for next year. With this decision to hike the minimum support price (MSP), the BJP-led government said it has fulfilled its election promise of providing farmers 1.5 times of their cost of producing a crop. The government step is likely to push food subsidy beyond Rs 2 lakh crore and possibly stoke inflation.
 
Today's decision covers kharif crops which include paddy, cotton, soyabean and some pulses, while the MSP using the same principle for rabi crops, including wheat and mustard, is yet to be announced. 
 
While the MSP of paddy (common grade variety) has been raised by Rs 200 a quintal to Rs 1,750, that of Grade A variety has gone up by Rs 180 to Rs 1,770 for the crop year to June 2019. This is based on production cost of paddy being considered at Rs 1,166 per quintal.
 
This is the highest ever single hike in paddy MSP, overshadowing Rs 170 per quintal announced by the previous UPA government in 2012-13 crop year. In the last four years, the NDA government has annually raised the paddy MSP between Rs 50-80 a quintal.
 
The MSP for kharif crops of 2018-19 has been raised by 3.7 per cent to 52.47 per cent as compared to last year. With this jump, now the support price of all 14 kharif crops is higher by 50-97 per cent over the production cost, the report said.
 
On the announcement of increase in MSP of Kharif crops, Dr US Awasthi, MD, IFFCO said, “We welcome the significant announcement made by the government of India on a steep increase in the minimum support price (MSP) of kharif crops. This historical move will increase the production cost to at least 1.5 times and reiterates the government’s promise to double farmers’ income by 2022. The government is ensuring and enabling the proper support wherever required." 
 
He added, "As the backbone of the rural economy, we at IFFCO are committed towards the farmers of our country and provide quality driven Agri inputs to farmers for their better yield." 
 
After the Cabinet Committee on Economic Affairs (CCEA) meeting, Home Minister Rajnath Singh, however, said the decision would cost an additional Rs 15,000 crore to the exchequer.

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Dr Awasthi, averred, "Our sole objective is to strengthen their social security net which will further transform their lives. On the occasion of cooperative’s Golden Jubilee year in 2017, IFFCO has been praised by Prime Minister Narendra Modi for their efforts and initiatives to train the farming community on the right use of fertilizers, advanced techniques and cash-less transactions.”