Govt increases support price for paddy, pulses

The government today increased the minimum support price (MSP) for paddy for the kharif year 2010-11 by Rs 50 per quintal. It also increased the MSP for pulses by up to Rs 700 per quintal.

MSP for the common variety paddy has been fixed at Rs 1,000 per quintal, while the same for Grade A variety is Rs 1,030 a quintal. The price increase is similar to last year.

MSP is a floor price assured by the government to farmers in case open market prices are lower. It is also the price at which procurement of wheat and paddy is made for the public distribution system.

The decision was taken by the Cabinet Committee on Economic Affairs.

Lat year, the government had announced a bonus of Rs 50 per quintal on both the varieties of paddy. A similar offer may be extended this year when procurement starts from October.

The MSP of pulses was increased by up to Rs 700 to a maximum of Rs 3,170 a quintal. The support price of pulses, considered to be the benchmark in the wholesale market, is 30-50 per cent of retail prices of some varieties like moong, urad and arhar, which are being sold for up to Rs 100 a kg in the retail market.

The rise in MSP is expected to induce farmers to raise the acreage under pulses and reduce dependence on imports. India is a net importer of pulses despite being the largest producer. The country produced 14.77 mt in 2009-10, against a requirement of 18-19 mt.

The raise is also likely to fuel rice prices in the open market and contribute to food inflation, which touched 16.74 per cent for the week ended May 29. “It (the rise) will affect prices and inflation will continue to be high. One of the major reasons for the soaring inflation is the high MSP, besides a gap in demand and supply,” said Bank of Baroda chief economist Rupa-Rege Nitsure.

MORE SUPPORT

# MSP for the common variety of paddy is Rs 1,000 per quintal, while that for Grade-A variety is Rs 1,030 a quintal

# MSP is a floor price assured by the government to farmers in case open market prices are lower

# It is also the price at which procurement of wheat and paddy is made for the public distribution system

# The MSP for pulses was increased by up to Rs 700 to a maximum of Rs 3,170 a quintal

# The support price for pulses, considered the benchmark in the wholesale market, is 30-50 per cent of retail prices of some varieties like moong, urad and arhar, which are being sold for up to Rs 100 a kg in the retail market

The widely consumed arhar dal (tur) saw the highest increase — from last year’s Rs 2,300 a quintal to Rs 3,000. The price of moong, another popular variety, has been increased to Rs 3,170 per quintal from Rs 2,760. The support price of urad has been increased to 2,900 a quintal from Rs 2,520.

The MSP of groundnut, sunflower seed and niger seed have been increased by Rs 200, Rs 135 and Rs 45 per quintal over the last year and have been fixed at Rs 2,300 per quintal, Rs 2,350 per quintal and Rs 2,450 per quintal, respectively.

The support price of soyabean (black), soyabean (yellow) and sesame have been increased by Rs 50 each over the last year and fixed at Rs 1,400, Rs 1, 440 per quintal and Rs 2,900 per quintal, respectively.