The increase in wheat MSP by Rs 50 per quintal is the same as recommended by the government advisory body, Commission for Agriculture Costs and Prices (CACP), but lower than what was proposed by the Agriculture Ministry due to concern over inflation.
"Wheat MSP has been increased by Rs 50 per quintal to Rs 1,400 for 2013-14 crop year as against Rs 1,350 last year", Food Minister K V Thomas said.
The Cabinet Committee on Economic Affairs (CCEA) has also approved the MSP of other rabi crops for 2013-14 crop year (Jule-June) to be marketed in the 2014-15.
The agriculture ministry had proposed an increase of Rs 100 per quintal to Rs 1,450 per quintal in wheat MSP for the 2014-15 marketing year (April-March).
When asked for the reasons for rejecting the Agriculture Ministry proposal, Thomas said: "We are concerned about inflation and we can control prices of foodgrains which we procure"
The increase in wheat MSP is likely to lead to a rise in the government food subsidy bill in the next fiscal and may also put pressure on inflation.
The government procures wheat from farmers at MSP during April-June. Wheat is the main crop grown in the rabi (winter) season.
Wheat MSP is the rate at which government buys the grain from farmers.
Wheat's sowing begins in October and harvesting starts from April onwards.