The Hindu : National : Cabinet defers decision on raising MSP for paddy

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Friday, Oct 26, 2007
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Cabinet defers decision on raising MSP for paddy

Gargi Parsai

Pawar to hold talks with Central Ministers

Ban lifted on export of superior quality non-basmati rice priced over $425 a tonne
Proposal to hike foodgrains’ issue price for APL category to prevent diversion

NEW DELHI: The Union Cabinet on Thursday deferred a decision on raising the minimum support price (MSP) for paddy for the current procurement season and hiking the central issue price of foodgrains for the Above Poverty Line (APL) population under the Targeted Public Distribution System (TPDS).

It, however, took the decision to partially lift the ban on the export of non-basmati rice.

The ban was imposed on October 9 and notified on October 15, to augment domestic stocks. The ban on export of superior quality non-basmati rice priced over $425 a tonne has been lifted.

While there was a proposal to raise the MSP of paddy by about Rs. 50 a quintal, the Food Ministry had proposed a hike in the issue price of APL foodgrains in proportion to the MSP of paddy and wheat. The proposal was to raise the price of TPDS wheat for APL from Rs. 6.10 paise a kg to Rs. 8.50 paise. The price of TPDS rice for APL was proposed to be raised to Rs. 10.82 paise a kg for Grade A rice and Rs. 10.82 paise a kg for the Common variety rice.

The issue price of foodgrains has not been raised under the TPDS since 2002. The proposal to hike the price for APL category is said to be to offset the burgeoning food subsidy bill and to close the gap between the TPDS and open market to prevent diversion of grains meant for the poor, targeted populations.

Food subsidy bill

The food subsidy bill is budgeted at Rs. 21,925 crore for 2007-08 and is expected to have gone up by about Rs. 4,500 crore after the latest increase in the MSP of wheat and paddy.

Now, it has been decided that Union Food and Agriculture Minister Sharad Pawar will hold talks with Central Ministers from rice-growing States and with State Ministers before a decision is taken. The decision was deferred also because of the absence of Union Finance Minister P. Chidambaram in Thursday’s meeting as he is abroad. The meeting was chaired by Prime Minister Manmohan Singh.

The government’s decision to partially lift the ban on non-basmati rice is influenced by the fact that rice export is banned in Thailand and Vietnam, two major exporting countries, due to shortfall in production there. Under such circumstances, the rice-growing States appealed to the government to allow exports from India of premium quality of non-basmati rice.

Earlier the government said that exports for which Letters of Credit were opened before October 9 would not come under the ban.

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