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Wednesday, 20 November 2013 00:18
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Promising another sharp hike in rice MSP is certain to further distort agricultural production in the country

If the Centre’s Food Security Act and the encouragement it gives to growing wheat and rice over other farm produce wasn’t bad enough, the Congress manifesto in Chhattisgarh promises to hike the minimum support price—that’s the Centre’s MSP plus a bonus from the state—to R2,000 per quintal. As compared to the current central MSP of R1,310 per quintal, that’s a huge step backward. Even today, with the BJP government in the state offering a 22% bonus over the Centre’s MSP, a lot of rice from other states gets diverted here. As compared to its 6% share in the country’s paddy production, Chhattisgarh’s share in rice procurement is 12%.

There is the obvious impact this will have on state finances, but the larger question for the country is that if wheat and paddy procurement prices are raised in this manner, why will farmers ever want to diversify to other crops like fruits and vegetables where, in the absence of central procurement, returns fluctuate wildly—this is the main reason for the spurt in fruit and vegetable prices being seen over the past few years. If this isn’t bad enough, the Congress has also promised to waive all short-term agriculture loans and to give free power to farmers who use pumps of less than 5HP. In other words, in election season, anything goes. If the BJP protests, all the Congress has to remind it is of the bonuses it is showering while in office.

 

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