Centre raises kharif MSP, credit assistance

Hindustan Times

7 days ago

The Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday approved a raise in minimum support prices (MSPs) for key kharif or summer-sown crops, increasing the rate for common paddy, the season's staple, to ₹2,369 per quintal (100 kgs) from ₹2,300 a year ago.
While fixing the MSPs, the government has adhered to the practice of setting the rates at a minimum of 1.5 times the cost of production so that farmers get 50% returns over cost, information and broadcasting minister Ashwini Vaishnaw said, briefing reporters.
MSPs are federally fixed floor prices that serve as a price signal for private traders and aim to help avoid distress sale. The government buys cereals, such as wheat and rice, from farmers at MSPs to build stockpiles for food security and reserves for the public distribution system, under which nearly 800 million beneficiaries receive free monthly food handouts.
The nearly 3% increase in the MSP for the commonest variety of paddy is the lowest in three years. India is the world's second-largest producer of rice and its biggest exporter.
Among key pulses, the floor price for pigeon pea or tur has been raised by ₹450 to ₹8,000 a quintal, while that of black gram or urad by ₹400 to ₹7,800 per quintal. The MSP of green gram (moong) saw a raise of ₹86 to ₹8,768 a quintal for 2025-26 kharif season.
India expects robust summer harvests after the state-run weather bureau on Tuesday said the country is likely to see surplus monsoon rains for the second straight year.
Plentiful rains drive up farm output and rural incomes, which help generate demand for manufactured goods and services. Agriculture, which directly or indirectly supports nearly half the population, accounts for 19% of the country's gross domestic product.
While farmers receive MSP rates for big cereals bought in large quantities by the government to build food reserves, they often have to sell many other commodities at below these minimum rates. Since 2019, several influential farm unions have launched widespread protests, seeking a legal guarantee for MSPs.
The Cabinet also raised the minimum cotton price by 8.3% to ₹7,710 per 100 kg and the soybean price by 8.9% to ₹5,328 rupees per 100 kg.
If the new MSPs are realised in markets, the profit margins of farmers over the cost of production are estimated to be highest in case of pearl millet or bajra (63%) followed by corn (59%) and pigeon pea or tur (59%).
Interest subvention
The Cabinet also approved the continuation of the so-called modified interest subvention scheme (MISS) for 2025-26 under which farmers can access short-term crop loans at affordable rates through Kisan credit cards.
The MISS for fiscal year 2025-26 will continue to provide a 1.5% interest subvention and will cost ₹15,640 crore.
Under the MISS, farmers receive short-term loans of up to ₹3 lakh at a subsidized interest rate of 7%, with 1.5% interest subvention (or discount) . Farmers who make timely payments are eligible for a further discount of 3%, which gets them crop loans at an effective interest rate of 4%.
Infrastructure
In a bid to increase regional connectivity, the cabinet has also approved the development of a four-lane Badvel–Nellore highway in the state of Andhra Pradesh.
The project will extend from Badvel–Gopavaram village on National Highway NH-67 to Guruvindapudi on NH-16, covering a total length of 108 km. It will be executed under the Build-Operate-Transfer model, with a total capital investment of ₹3,653.10 crore.
The construction of the highway will significantly reduce the distance between Badvel and Krishnapatnam Port by 34 km to 108 km and effectively shorten the journey time by an hour, from 2.5 hours to 1.5 hours, amounting to a 40% reduction in travel time, the government said in a statement.
Moreover, the project is expected to alleviate congestion on existing NH-67 and NH-16, while contributing to a reduction in both vehicle operating costs and carbon emissions.
This highway will connect three major industrial nodes of Andhra Pradesh: the Kopparthy Node on the Visakhapatnam–Chennai Industrial Corridor (VCIC), the Orvakal Node on the Hyderabad–Bengaluru Industrial Corridor (HBIC), and the Krishnapatnam Node on the Chennai–Bengaluru Industrial Corridor (CBIC).
Union road transport and highways minister Nitin Gadkari said the highway will also provide access to 19 key cultural and social destinations, including the Srikalahasti Temple, Penchalakona Waterfall, Srisailam, Somasila Waterfall, Somasila Temple, Udayagiri Fort, Siddavattam Fort, and Vontimitta.
The government statement added the project with 108.134 km will generate about 2,000,000 lakh man-days of direct employment and 2,300,000 man-days of indirect employment. The project will also induce additional employment opportunities due to increase in economic activity in the vicinity of the proposed corridor.
Responding to the cabinet announcements, Modi said his government is committed to the welfare of farmers, adding that 'the decision taken by the Cabinet will boost the income of farmers as well the production of crops'.
'The 4-Lane Badvel-Nellore Corridor, whose construction has been approved by the Cabinet will benefit the development journey of Andhra Pradesh and generate several opportunities for the youth of the state.' The projects related to Maharashtra and Madhya Pradesh will boost growth, sustainability, lower logistics costs and more, he said.
With inputs from Soumya Chatterjee