In order to encourage farmers to cover more area under the crop in the ongoing Rabi season, the Government has raised the Minimum Support Price (MSP) for wheat by Rs 50 per quintal to Rs 1,400 per quintal. The Commission for Agriculture Costs and Prices (CACP) has recommended for the increase in MSP and government raised it in line with its expectations while the increase was lower than what was proposed by the Agriculture Ministry due to concern over inflation.
The agriculture ministry had proposed an increase of Rs 100 per quintal to Rs 1,450 per quintal in wheat MSP for the 2014-15 marketing year (April-March). The Cabinet Committee on Economic Affairs (CCEA) has also approved the MSP of other Rabi crops for 2013-14 crop year (July-June) to be marketed in the 2014-15.
Wheat is the main crop grown in the Rabi (winter) season and sowing begins in October and harvesting starts from April onwards. The government procures wheat from farmers at MSP during April-June. Wheat MSP is the rate at which government buys the grain from farmers. The increase in wheat MSP is likely to lead to a rise in the government food subsidy bill in the next fiscal and may also put pressure on inflation.