Govt raises MSP of pulses, but below CACP's recommendation

The Union ministry of agriculture has finally revised the minimum support price (MSP) of pulses. The MSP of tur (arhar) and moong were revised to Rs 3,840 a quintal and Rs 4,400 a quintal, respectively, for 2012-13.

While MSP for tur and moong have been revised a tad lower than what was recommended by the Commission for Agricultural Costs and Prices (CACP), urad was retained at Rs 4,300 a quintal. Last year, the MSP of urad was Rs 3,300 a quintal, moong Rs 3,500 and tur Rs 3,200 a quintal.

CACP and the ministry of agriculture had earlier recommended an MSP of Rs 4,000 a quintal for tur and Rs 4,500 a quintal for moong for 2012-13. Officials said the revised MSPs will be the final one for tur and moong for 2012-13.

Farmers and industry were awaiting the revised MSPs since the Cabinet Committee on Economic Affairs had put on hold the MSP for pulses (arhar, moong and urad) while announcing those for other kharif crops in 2012-13.

Officials said CACP was asked to rework the MSP of pulses due to declining prices in the market and expectation of robust production, close to the 18.1 million tonnes (mt) last year. In addition, in anticipation of demand, there have been heavy imports.

The earlier high prices had hit retail consumption, leaving a lot of stock in the market. Hence, supply was more than the demand, which eases price pressure.

In this scenario, said sources, the high MSP suggested would create an inflated base. This would push up the burden on the exchequer, already facing strained financial conditions ,since pulses are both an essential commodity and also covered under the public distribution system of the government. It would create a high base for the decision on next year’s MSP, too. Hence, there was a need to rework it, they said.

The food ministry had firmly opposed the proposal for a bonus to growers in at least those commodities where there was government procurement, such as rice and pulses.

MSP is the floor price which sets the base for market prices and procurement. According to the fourth advance estimates released by the ministry of agriculture, total kharif pulse production stands at 930,000 tonnes as against a target of 1.20 mt. Production of tur, primarily a kharif crop, is expected to be 2.65 mt, as against a target of 3.08 mt, while urad production is likely to be 1.28 mt (1.35 mt). Moong, both a rabi and a kharif crop, is expected to see production of 1.7 mt, higher than the set target of 1.27 mt.