The BJP poll manifesto had promised that its government would share 50 per cent of the cost of production incurred by the farmer in producing crops in both the seasons.
According to ministry officials, hectic discussions are being held to ensure ways to present the options before the new government.
“Views have been sought from the Commission for Agricultural Costs and Prices (CACP) to work out ways including reworking the minimum support price (MSPs) suggested for the kharif crops”, said official sources.
However, CACP and ministry officials are also of the view that increase of MSP to the extent of recovering 50 per cent of the cost may fuel inflation which contradicts the manifesto of the BJP-led government. The BJP manifesto promises to fight price rise tooth and nail. Rise in MSP by 50 per cent of the cost will have a spiralling effect on prices.
Officials of the food and consumer affairs ministry are specifically concerned. Some of the options which may be presented to the new government and discussed among ministries is declaring bonus over main food crops like rice, wheat, pulses and oilseeds in some cases, rather than going for massive increase in MSP. The MSP is otherwise known as government announced procurement price that acts as a floor market price for the crops.
According to officials, famers engaged in production of some of these crops may look forward to high bonus in addition to the MSP. They added this announcement may be made immediately after the government is formed as farmers are already looking forward to MSP of the Kharif season.
Another long-term way is to stagger the procurement of these crops by government agencies and offer the farmers some additional subsidy in the form of interest free of concessional bank loan along with MSP to store these crops on their own till August-September.
This will increase the efficiency of the food grain storage which is big problem with the state and central government agencies like the Food Corporation of India.
These agencies are laden with rabi crops and take time for getting storage empty and in the meantime, procurement of kharif crops starts. In the process there is a huge wastage of crops either way.
In this way, it will be a win win for all concerned. The farmers get more money as per the promise in the manifesto, some time is given to FCI and other procurement agencies to get their storages cleared to avoid wastage of crops due to storage problem and due to sufficient stock, prices remain controlled.
However this proposal is bit long term as it requires changing the conventional procurement cycle.
Meanwhile, the CACP has recommended moderate increase of 1-5 per cent in minimum support prices (MSP) of agricultural commodities for ensuing Kharif season 2014-15.
Even if the global prices and demand came off in 2013-14 compared to the available stock in the country, the prices have to be maintained at MSP even if market prices fell.
Currently, for many items like groundnut, sunflower, tur, urad, government agencies are engaged in procurement at MSP even when the market prices of these crops are ruling below MSP.
The MSP for paddy has been recommended an increase in the range of 3-5% and the final MSP going by CACP recommendation is expected to hover in the range of around 1,350-1,380 per quintal as against Rs 1,310.
A statuesque has been proposed in groundnut and very minimal increase of 1-3% has been suggested for MSP of pulses and edible oil seeds. MSP for commercial crops like sunflower and cotton are expected to go up by Rs 50-100 per quintal, cotton on the lower side.
Continuing with the police free trade, the price policy report has suggested for freeing trade in all commodities except for pulses and edible oil going by the domestic deficit in these items.
Source : Business Std
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