NEW DELHI: Prices available to farmers for their harvest could increase by about 15% as a result of the budget announcement to hike the Minimum Support Price (MSP), according to an estimate prepared by government’s think tank Niti Aayog. This is likely to raise the income of farmers by 24%, it has projected.
While proposing three options in a draft document titled “Ensuring MSP Benefits to Farmers”, the Niti Aayog has estimated that the government will require to earmark between Rs 47,000 crore and Rs 1.11 lakh crore to see every farmer gets the assured price for his produce.
It has also cautioned that increase in MSP “will have strong implications for inflation and consumers” while suggesting the need to weed out middlemen who corner the profit by improving supply chain, competitive markets, application of modern logistics and commerce in agriculture marketing.
“MSP based on new formula of 50% more than (A2+FL) cost implies average increase of 7.1% in the existing MSP. The second source of increase in prices is replacement of the existing FHP, which are lower than MSP, to the level of MSP. This is likely to raise MSP by another 7% to 10%. Thus the combined effect of the two budget announcements on farm level prices will be about 15%,” the think tank has said.
Farm harvest price (FHP) is the average wholesale price at which the commodity is disposed of by the producer at the village site during six to eight weeks immediately after the harvest period.
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