Cabinet approves enhanced MSP for Rabi Crops of 2016-17 season

Announces Bonus for Gram, Masur, Rapseed/Mustard and Safflower cultivation

The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi has given its approval for the increase in the Minimum Support Prices (MSPs) for all Rabi Crops of 2016-17 Season. Further, to incentivise cultivation of pulses and oilseeds, in the country Government has announced a bonus on these crops, payable over and above the following approved MSP.

Commodity MSP for 2015-16 Season (Rs / Quintal) MSP approved for 2016-17 (Rs / Quintal) IncreaseAbsolute (Rs / Quintal) percentageWheat 1525 1625 100 6.6Barley 1225 1325 100 8.2Gram 3500 (includes bonus of Rs.75 per quintal) 4000 (includes bonus of Rs.200 per quintal) 500 14.3Masur (Lentil) 3400

(includes bonus of Rs.75 per quintal)

3950 (includes bonus of Rs.150 per quintal) 550 16.2Rapeseed / Mustard 3350 3700 (includes bonus of Rs.100 per quintal) 350 10.4Safflower 3300 3700 (includes bonus of Rs.100 per quintal) 400 12.1

The approval to increase MSPs is based on the recommendations of Commission for Agricultural Costs and Prices (CACP) which while recommending MSPs takes into account the cost of production, overall demand-supply, domestic and international prices, inter-crop price parity, terms of trade between agricultural and non-agricultural sectors, the likely effect on the rest of the economy, besides ensuring rational utilization of production resources like land and water.

The recommendation of CACP being the expert body, are generally accepted as such. However, to incentivise cultivation of pulses and oilseeds, the Cabinet has decided to give a bonus of Rs.200/- per quintal for Gram, a bonus of Rs 150/- per quintal for Masur/Lentil and a bonus of Rs 100/- per quintal each for Rabi oilseeds viz. Rapeseeds/Mustards and Safflower, over and above the recommendations of the CACP. There is an increasing gap between the domestic demand and supply of pulses and oilseeds as a result of which reliance on import is increasing. Government has, therefore, announced this bonus on pulses and oilseeds to give a strong price signal to farmers to increase acreage and invest for increase in productivity of these crops. The increase in cultivation of leguminous pulses and oilseeds will also have additional environmental benefits as these crops are less water consuming and help in nitrogen fixation in the soil.

Food Corporation of India (FCI) will be the designated central nodal agency for price support operations for cereals, pulses and oilseeds. To supplement the efforts of FCI, the National Agricultural Cooperative Marketing Federation of India Limited (NAFED), National Cooperative Consumers' Federation (NCCF), Central Warehousing Corporation (CWC) and Small Farmers Agri - Business Consortium (SFAC) may also undertake procurement of oilseeds and pulses as per their capacity.

Background:

Besides increase in Minimum Support Prices (MSP) of Rabi crops, Government has taken several farmer friendly initiatives. These, inter-alia, include the following:

· The Government had declared a bonus, over and above the MSP, of Rs 75 per quintal for Rabi pulses of 2016-17 marketing season, a bonus of Rs. 425 per quintal for Kharif pulses viz. Arhar, Moong and Urad, a bonus of Rs 200 per quintal for Sesamum and a bonus of Rs. 100 per quintal for Groundnut, Sunflower, Soyabean and Nigerseed.

· A new crop insurance scheme 'Pradhan Mantri Fasal Bima Yojana' has been launched by the Government. Under this scheme, the premium rates to be paid by farmers; are very low- 2% of sum insured for all Kharif crops, 1.5% for all Rabi crops' and 5% for commercial and horticulture crops. The new insurance scheme involves use of simple and smart technology through phones & remote sensing for quick estimation and early settlement of claims. The Government has also launched a Mobile App "Crop Insurance" which will help farmers to find out complete details about insurance cover available in their area and to calculate the insurance premium for notified crops.

· The Government has also launched a scheme to develop a pan India electronic trading platform under 'National Agriculture Market' (NAM) aiming to integrate 585 regulated markets with the common e-market platform. Each State is being encouraged to undertake three major reforms - allow electronic trading, have a single license valid throughout the State and a single entry point market fee. It will also enable farmers to discover better prices for their produce. 221 markets in 11 States