Wheat support price raised, RCF stake sale gets nod

To strike a balance between rising food subsidy and growing input cost for farmers, the Cabinet Committee on Economic Affairs (CCEA) has raised the minimum support price (MSP) for wheat by just five per cent to Rs 1,350 a quintal for the 2013-14 crop marketing season, which starts from April 1, 2013, as against 1,285 a quintal for the 2011-12 marketing season.

CCEA has also allowed export of an additional 2.5 million tonnes of wheat from the Central pool over the already cleared two million tonnes.

The decision to raise the MSP is at variance with the recommendation of the Commission for Agricultural Costs and Prices (CACP), which had suggested freezing the MSP at Rs 1,285 per quintal and an additional bonus of Rs 40 per quintal, provided the government manages to liquidate 15 million tonnes of wheat stock from the Central pool.

“The rationale behind recommending the freeze of MSP was simple: the country is loaded with hugely excessive stocks of wheat — 42 million tonnes against the buffer stock norm of 14 million tonnes. The country does not have ample storage capacity to even store it properly. Higher incentives for cereal production would give wrong signals to farmers, and accentuate the problem of stocks leading to large inefficiency and a cereal-centric production basket, while demand patterns are diversifying,” CACP chairman Ashok Gulati told Business Standard.

The commission in its revised recommendation struck to its earlier proposal of freezing the MSP at Rs 1,285 per quintal, but suggested a bonus of Rs 40 per quintal if the government liquidated 15 million tonnes of stock by March 31, 2013.

According to Gulati, two things changed since the submission of the price policy report — one, diesel prices and global prices of wheat due to severe drought in the US. “We worked out the impact of diesel price hike on cost of production of wheat. It is around Rs 29 per quintal. The total cost of production and marketing, worked out to Rs 1,128 per quintal (weighted average at all India level), while the paid out costs (out of pocket expenses) plus family labour costs work out to Rs 716 per quintal. The recommended MSP of Rs 1,285 per quintal covers the costs very comfortably. So, there is no case for raising MSP due to escalation in diesel costs,” said Gulati.

The agriculture ministry had rejected CACP’s recommendations and instead suggested a Rs 100 per quintal rise in MSP to take it to Rs 1,385 a quintal, which the Cabinet on Wednesday trimmed to Rs 1,350 per quintal..

“I think it is a reasonable hike and will take care of some of the increase in cost of production of wheat,” said Planning Commission member and noted agriculture economist Abhijit Sen.

HELPING HAND (Minimum support price; Rs /quintal)
Crop	2012-13	CACP recommendation for 2013-14	Final approved for 2013-14 season	% Change from last year
Wheat*	1,285	1,285+40**	1,350	5.05
* Wheat produced in 2012-13 crop season would be marketed in 2013-14 ** The Commission For Agriculture Costs and Prices (CACP) had recommended freezing the MSP for 2013-14 at this year’s level of Rs 1,285 per quintal but announced a bonus of Rs 40 a quintal, if the government manages to liquidate 15 million tonnes of stock by March 31, 2013 Source: Government of India

Nod to stake sale in RCF
The government on Wednesday approved sale of its 12.5 per cent stake in Rashtriya Chemicals and Fertilisers Ltd (RCF), which could fetch around Rs 360 crore to the exchequer, Finance Minister P Chidambaram said.

The government currently holds 92.5 per cent stake in RCF, and the paid-up capital of the company stands at Rs 551.69 crore. At the current market price of the Rs 57.80 a share, the 12.5 stake sale could fetch around Rs 360 crore to the exchequer.

Nod to licensing of land for PPP projects at ports
In a bid to augment the capacity of major ports, the government has approved a proposal for licensing of land for development of projects under the public-private partnership model in these ports, Chidambaram told reporters here after the meeting.

New science policy
India is set to unveil its new science policy next week which lays greater thrust on innovation, establishing research institutes and participation in mega science projects, with an aim to positioning itself among the top five scientific powers in the world by 2020. The Cabinet, at a meeting chaired by Prime Minister Manmohan Singh, on Wednesday approved the Science, Technology and Innovation (STI) Policy-2013. It will be released by the prime minister on January 3, 2013 at the inauguration session of the centenary edition of the Indian Science Congress in Kolkata.