MSP hike could stoke inflation, prompt RBI to raise interest rates: Experts

The government, however, said the latest hike in the so-called minimum support prices would help farmers increase their income and boost the economy

India on Wednesday raised the government-mandated price for summer-sown crops such as rice and cotton by the most since Prime Minister Narendra Modi came to power in 2014, as he looks to woo millions of poor farmers ahead of a general election next year.

The country announces support prices for more than a dozen crops each year to set a benchmark. But analysts say the median hike this year was 25 per cent compared with 3-4 percent in the last three years, which could hit government finances and stoke inflation.