India has raised the minimum support prices for six Rabi crops amid concerns over inflation.
The hikes ranged from Rs 100 to Rs 500 a quintal for the marketing season 2023-24, as announced by Information & Broadcasting Minister Anurag Thakur at the cabinet briefing in New Delhi on Tuesday.
Lentils (masur) saw the highest hike of about 9% to Rs 500 per quintal.
Prices of rapeseed and mustard were hiked 7.92%, while barley and wheat were increased by 6.11% and 5.45%, respectively, over the previous season
"The government has taken steps to ensure that the farmers will get a cost plus (+) 50% minimum profit (this season)," Thakur said at the briefing.
While the hike in MSP makes it imperative that farmers are compensated adequately, this may propel the already high inflation levels.
The MSP hikes will be meaningful for wheat as the government looks to increase its procurement, according to Pushan Sharma, Director – Research, CRISIL Market Intelligence & Analytics.
"In RMS 2021-22, around 40% of wheat and 6% of the gram were procured. In RMS 2022-23, wheat procurement fell to 18% of the produce because of high international wheat prices which had led to a surge in exports and boosted sales in the open market," he said.
"Wheat stock with the Food Corporation of India has been halved on-year (227.46 lakh ton as on Oct. 1, 2022). The higher MSP of 5% announced for this season (versus 2% in the previous season) can be interpreted as a move by the government to ramp up stock at central level."
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