The government yesterday hiked the minimum support price for paddy by a record Rs 200 per quintal that will cost the exchequer over Rs 15,000 crore, and help fulfil its poll promise to give farmers 50% more rate than their cost of production.
The decision, taken by the Cabinet Committee on Economic Affairs (CCEA) headed by Prime Minister Narendra Modi, comes less than a year before next general election.
The previous highest hike in paddy MSP was Rs 170 a quintal in the 2012-13 the election year of UPA-II. In the last four years, the NDA government has raised the paddy MSP between Rs 50-80 per quintal.
While the BJP had promised in 2014 to give farmers a price of 1.5 times of cost, an announcement to give effect to the promise was made in the government's fifth and final annual Budget presented on February 1 this year.
Briefing about the CCEA decision, Home Minister Rajnath Singh said the cabinet has approved the MSP of 14 kharif (summer-sown) crops for the 2018-19 season.
The government's price advisory body CACP has calculated production cost of paddy at Rs 1,166 per quintal and the government has raised the MSP of paddy (common grade) by Rs 200 to Rs 1,750 per quintal for 2018-19 season, he said.
Agri-linked stocks soar up to 13% on hike in MSP for paddy
Shares of companies related to agriculture sector surged up to 13% yesterday after the government hiked the minimum support price for paddy by a record Rs 200 per quintal. Kohinoor Foods soared 12.96%, LT Foods 7.01% and Chaman Lal Setia Exports 2.27% on BSE. Fertiliser stocks also saw buying, where Coromandel International rose 3.33%, Deepak Fertilisers & Petrochemicals Corporation 1.71%, Rashtriya Chemicals and Fertilisers 0.92% and Chambal Fertilisers & Chemicals 0.16%.