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Business News/ Politics / Policy/  Cabinet schedules Union Budget on 1 February, hikes MSP of wheat, pulses

Cabinet schedules Union Budget on 1 February, hikes MSP of wheat, pulses

The Cabinet also approved a hike in the minimum support prices of wheat and pulses

The Cabinet on Tuesday set 1 February as the Union Budget date. Photo: MintPremium
The Cabinet on Tuesday set 1 February as the Union Budget date. Photo: Mint

New Delhi: In a respite to farmers in the top wheat growing states of Punjab and Uttar Pradesh, the union cabinet on Tuesday approved a modest 6.6% hike in the minimum support price (MSP) of wheat, the main spring harvest for which planting has begun.

The MSP hike of Rs100 per quintal, the highest announced by the Narendra Modi-led government, comes ahead of assembly elections in Punjab and Uttar Pradesh, due in early 2017.

The government also decided to present the Union budget for 2017-18 on 1 February, instead of on the last working day of the month as has been the practice, in order to speed up the implementation of various schemes from the beginning of the financial year, according to two people familiar with the development, who asked not to be named.

The increase in the MSP assumes significance as Punjab and Uttar Pradesh are the top two producers of wheat in India, contributing over 40% of the country’s wheat output.

With a Rs100 hike, wheat growers will get a support price of Rs1,625 per quintal (one quintal is equal to 100kg).

The 6.6% hike in MSP is higher than the 5.2 % increase announced in 2015 and 3.6% in 2014.

Minimum support price is the cost at which the union government buys foodgrains from farmers that are then sold at subsidized rates through the public distribution system.

Further, in a move to incentivise production of pulses and oilseeds, the cabinet also raised the procurement price of winter-grown pulses such as gram and lentils by 14.3% and 16.2%, respectively. This is higher than the 10.2% and 10.5% raise in MSP of gram and lentils, respectively, announced in 2015. The MSP for kharif pulses was also raised sharply this year.

For gram, the main winter pulse crop, MSP is Rs4,000 per quintal, which includes a bonus of Rs200 per quintal.

For masur, or lentils, the MSP is Rs3,950 per quintal including a bonus of Rs150 per quintal. For mustard, the cabinet raised the MSP by 10.4% to Rs3,700 per quintal, which includes a bonus of Rs100 per quintal.

The bonus announced by the cabinet is over and above the MSP recommended by the Commission for Agricultural Costs and Prices (CACP).

Citing an increasing demand-supply gap and reliance on imports, an official statement said that the bonus on pulses and oilseeds will “give a strong price signal to farmers to increase acreage and invest for increase in productivity of these crops".

The statement adds, “the increase in cultivation of leguminous pulses and oilseeds will also have additional environmental benefits as these crops are less water consuming and help in nitrogen fixation in the soil."

According to an official statement issued late on Tuesday evening, the cabinet also approved a Rs6,414.2 crore project as part of the proposed Shendra Bidkin Industrial Area (SBIA) near Aurangabad in Maharashtra to be executed by a joint venture between the central government and the state of Maharashtra.

The cabinet also approved the Centre’s equity investment of Rs2,397.20 in the joint venture, Aurangabad Industrial Township Limited (AITL), in which the centre holds 49% and the state the remaining equity.

The cabinet approved setting up of a special committee for inter-linking of rivers as per a 2002 Supreme Court order.

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Sayantan Bera
Sayantan Bera is National Editor with the Long Story team at Mint, writing on food and nutrition, agriculture, environment, and the rural economy. His work ties notes from the field with larger economic trends. A journalist with over fifteen years of experience, he writes for the curious reader.
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Published: 15 Nov 2016, 10:22 PM IST
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