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

05 July, 2018, 13:19 | Author: Brooke Harris
  • The number of goods and services attracting the highest rate of GST were pruned before state elections last year and with polls due in some more states this year and for parliament in early 2019 more such tweaks can’t be ruled out. That may hurt reven

For the 2018-19 crop season, the MSP for paddy, the main crop planted during the ongoing kharif (summer) season, has been fixed at Rs 1,750 per quintal, 13% higher than a year ago.

The MSP of paddy (common) was Rs 1,550 per quintal and Rs 1,590 per quintal for paddy (grade A) variety. "The BJD government in Odisha had asked the Centre to announce an MSP of at least ₹2,930 a quintal of paddy as the input cost in Odisha is higher than the calculations made by the Centre", he said.

Announcing the Cabinet's "historic" decision, Union Home Minister Rajnath Singh said that the MSP for common grade paddy has been increased from Rs 1,550 per quintal to Rs 1,750 per quintal, an increase of almost 13 per cent.

The government said prices paid to local farmers for common grade paddy rice will be raised by 13 per cent from a year ago to Rs 1,750 ($25.50) per 100 kg for the year starting on July 1.

"Should the government rely on large-scale procurement of crops to implement these prices, then the fiscal cost could be around 0.3 percent of GDP (gross domestic product), which will likely be shared by the central and state governments", said A. Prasanna, chief economist at ICICI Securities Primary Dealership in Mumbai.

To woo distressed farmers, the government had assured farmers in the Budget for 2018-19 that it would increase MSPs for the summer-sown season so that they get 50% returns over cost.

Salah Signs 5-year Deal With Liverpool
The deal, however, does not contain any release clause for Salah should he decide to leave Liverpool anytime in the future. Salah scored in both of those games but could not stop his country from losing and going out in the group stages.

"This will send a positive message to farmers and boost their confidence and end farm distress", Singh said. The hike in MSP will cost the exchequer over Rs 15,000 crore, he added.

Among pulses, tur will fetch Rs. 5,675, moong Rs. 6,975, and urad Rs. 5,600. However, CoP according to C2 formula was Rs 2,089 per quintal in 2017-18 and so the MSP should have been Rs 3,113.5 per quintal. Asserting that farmers are biggest producers and consumers, Singh said, "After the country's independence, farmers have not got right price for their produce". The MSP of jowar (hybrid) has been raised by Rs 730 per quintal to Rs 2,340 for this year, while that of Maldani variety by Rs 725 per quintal to Rs 2,450, the government said.

Congress President Rahul Gandhi had accused the prime minister of "finishing the farmer". The Food Corporation of India (FCI), the government's nodal agency for procurement and distribution of foodgrains, buys wheat and rice from farmers at MSP and supply the grains under the food security law. "I want to thank Prime Minister Narendra Modi and his cabinet colleagues.this is a big decision in the interest of farmers.this will resolve many problems faced by farmers", he told reporters here after visiting "Maa Vindhvasini" shrine.

Reacting to the development, MS Swaminathan, who headed the previous national commission on farmers, said that hiking the MSP rates is "a welcome first step" in tackling the agrarian crisis.

The government was regularly attacked by farmer associations and the opposition for making "hollow promises" about doubling their income by 2022. "But unlike them, our initiatives do not stay limited to the files, but enter the field", he said, citing crop insurance schemes, higher minimum support price, soil health card and neem-coated urea as the cornerstone of his government's rural focus.

Recommended:



Popular

Government to ban "gay conversion therapies"
Dawn Butler, Labour's shadow women and equalities minister, said: "Much of this plan is yet more reviews and consultations". And two in five LGBT people had experienced discrimination, such as verbal harassment, in the past year alone.

Top scorers meet best defence in Brazil v Belgium clash
Brazil coach Tite dismissed talk that his team is the favourite to win the match against Belgium, let alone the World Cup. Belgium is the competition's top scorer with 12 in its four games, with the goals spread around the team.

Federer eases into 3rd round at Wimbledon
Kristina Mladenovic advanced to a Wimbledon third-round meeting with Serena Williams after defeating Tatjana Maria 6-2, 6-2. Williams was almost as good, losing just five of 32 points on her first serve in a 6-1, 6-4 win over Viktoriya Tomova.

Serena Williams wins first Wimbledon match as a mom
Federer, born the month before Williams, is now the oldest man in the Top 100 at 36. Serena added: "After that, I lost 10 pounds in a week, I just kept dropping".

Cent Issues A Warning To Blac Chyna's New Boxer Boyfriend: "RUN"
The 30-year-old mother-of-two shared a photo of Devin with the caption: " Hi babe " and the latter replied with a love emoji. Haney has been boxing for a little more than three years now and had debut bout in December of 2015.

LeBron opts out of Cleveland deal, becomes free agent
Gilbert has gone above and beyond financial barriers to appease James, but the well could be running dry. The Cavs now believe they are "still in the mix" to retain James, according to McMenamin.

Cavani double sees Uruguay past Portugal
We will do the necessary studies. "In the second we were better, but we didn't make it", he explained. Portugal had more than 60 percent of possession, which they found hard to translate into a goal.

Woman's toenails fall off after fish pedicure, researchers say
Fish pedicures involve having small fish nibble at your feet while they're soaked in a tub of warm or room temperature water. The case , as far as Lipner knows, would be the first documented instance of onychomadesis ever caused by fish.

Three suspects charged with kidnapping Halloween actor
Stewart also cut and disabled Capone's tongue, "put out an eye", and cut his nose, ear and lip, according to the indictment. Once there, the three allegedly forced Capone to strip naked before holding him in a bathtub without food for 30 hours.

What to do around Portland on July 4th
Brooksville : It's $10 for admission, $5 for ages 4-12, and free for those under the age of 3 at the Hernando County Fairgrounds. Black Eagle Volunteer Fire Chief Mike Deshayes says this year's theme is "Land of the free because of the fearless ".