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Minimum Support Price Hike

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The central government has announced a fresh increase in the minimum support price (MSP) for kharif crops, making the new MSP 50% higher than the actual paid-out costs of production plus the imputed value of family labour (excluding the cost of the land). This has created a wave of dissatisfaction among political parties and farmer organisations like the All India Kisan Sabha, which claim that the rise in MSP is insuffi­cient and a mere façade as the government has ignored the recommendation regarding calculation of the cost of production as given by the M S Swaminathan Committee.

A fair judgment of the government’s decision can be made only by considering the current upsurge in the consumer price index (CPI) inflation alongside MSP rise; otherwise, it would be a disservice to the complex nature of macroeconomics. The trend of the CPI inflation is quite worrying. According to the Central Statistics Office (CSO), it has increased from a meagre 1.46% in June 2017 to 4.87% in May 2018.

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Updated On : 17th Aug, 2018

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