The central government last week announced a sharp hike in minimum support prices (MSPs) of kharif crops.
As shown in Chart 1, the MSP for paddy was hiked by Rs 200 per quintal to Rs 1,750, the steepest hike (in absolute terms) in recent times. With this, the government has fulfilled its budget promise of fixing MSPs at 1.5 times the cost.
But this increase in MSP isn’t an outlier. As shown in Charts 2 and 3, previous governments have also tended to increase MSPs sharply around general elections.
With current market prices well below the support prices, experts fear
