Rise msp: MSPs of Kharif crops have risen sharply, the government says it will not hurt the budget deficit, inflation

In what could be a relief for farmers, the Cabinet Committee on Economic Affairs on Wednesday raised the Minimum Support Price (MSP) for Kharif crops for fiscal year 19.

MSP for the common paddy variety was increased by about 200 per hundredweight while that of the fine paddy rose to Rs 1,750, from Rs 1,550 to FY18. The government also raised the MSP price to Rs. 5,600 per 100 kg from Rs. 5,400 the previous year.

"We do not think there should be any worries about the budget slippage due to the latest rise in the MSP," said Niti Aayog's vice president, Rajiv Kumar, at ET Now. "We must not look at the negative aspects: food and fuel do not contribute to current inflation".

In the case of moong, the MSP rose to Rs 6,975 per 100 kg, compared with Rs 5,575 previously. Ragi MSP now raises to Rs 2,897 per 100 grams, from Rs 1,900 earlier. For soybeans, the figure is 3,399 rupees per 100 kg, compared to 3,050 rupees previously.

For the hybrid jawar, MSP now reads Rs 2,430 per 100 kg, against Rs 1,700. Bajra MSP rises to Rs 1,950 per 100 kg against Rs 1425.

The announcement pushed up benchmark stock indexes, which were in the lead on the highest day.

The rise of the MSP will bring a paradigm shift in the agricultural sector, said Union Secretary of Agriculture. The increase in MSP, he said, was 150% higher than the cost of cultivation, as promised by the government in the FY19 budget.

India has a robust buying mechanism, the secretary said.

Key agrarian states like UP, Bihar and parts of MP are on the back, resulting in a 10% decrease in plantings up to here in delays in the year. advanced southern monsoon and the announcement of the MSP, notes Axis Capital.

The total area planted was 115.9 million hectares until June 22 against 128.4 lakh last year. Oilseeds and pulses experienced the largest declines of 49 and 24 percent respectively.

Brokerage Axis Capital was expecting the new MSP policy to stimulate cereal inflation with the effect of driving on other foods, which should have a direct impact on the market. overall inflation. "But there are potential offsets for good milk, sugar and vegetable supplies," he said recently.

"Historically, we have always seen that in a year when monsoons are better with MSP hikes expectations, discretionary spending patterns obviously improve specifically in terms of rural and semi-urban economies. With regard to rural infrastructure and rural consumption, we expect them to multiply, because this will also be felt, "said Mayuresh Joshi, fund manager at Angel Broking.