New Delhi: Apprehending shortfall in rice procurement due to monsoon failure, the government on Thursday increased the minimum price paid to farmers for paddy by Rs 100 a quintal and that for pulses by up to Rs 240 a quintal.
The move is aimed at supporting farmers and encourage them to sell their produce to official agencies, but would lead to higher prices for consumers who are shelling out over 40 percent more for pulses than they did in June.
The MSP for common variety of paddy has been hiked to Rs 950 from Rs 850 per quintal and for the A-grade to Rs 980 from Rs 880 per quintal for 2009-10 season.
The decision to increase the support prices for paddy, toor, moong and sesame was taken by the Cabinet Committee on Economic Affairs, chaired by Prime Minister Manmohan Singh.
The MSP for toor has been increased to Rs 2,300 from Rs 2,000 per quintal, moong to Rs 2,760 from Rs 2,520 per quintal and sesame to Rs 2,850 from Rs 2,750 to Rs 2,850 per quintal.
"Last year was the record procurement. I am sure farmers will offer surplus paddy for procurement this year," Home Minister P Chidambaram told reporters after the CCEA meeting.
In 2008-09 season (October-September), the government has so far procured about 325 lakh tonnes of rice, which is coming handy to overcome the shortfall in production of rice now.
However, the MSP, generally announced before sowing time, is late this season and won`t make much difference in terms of increase in acreage. The only intention for hiking MSP seems to be to induce farmers to sell their produce to government agencies, an analyst said.
With over one-third of the country`s districts having been declared drought affected, the rice production is likely to drop by 10 million tonnes in the current Kharif season.
"This shortfall in monsoon may result in shortfall in area coverage of paddy by about 5.7 million hectares compared to last year and production of rice may be reduced by 10 million tonnes," Agriculture Minister Sharad Pawar had said yesterday.
Chidambaram said the government is offering an attractive MSP and "let`s see how production and procurement (of paddy) takes place," the Home Minister said.
The Kharif sowing runs from June to September.
Asked about what the government was doing to contain the sharp rise in prices of essential food items, Chidambaram said the states should impose stock limits which should be followed dehoarding operations.
"Stock limit must be imposed...Infact, dehoarding follows stock limit," he said.
Chidambaram said the Centre had declared its intentions last week at the Chief Ministers Conference here for taking steps to mitigate the impact of drought. "Already steps are being taken," he said.
He said that the government has enough foodgrain stocks to take care for 13 months.