"This decision has been taken after a thoughtful consideration. We hope that this will be a good news to all our farmer friends at the time of Diwali," Law Minister Salman Khurshid told mediapersons after a meeting of the the Cabinet Committee on Economic Affairs (CCEA) here.
The minimum support price (MSP) for wheat was Rs 1,170 per quintal (inluding the Centre`s bonus of Rs 50 a quintal) in the 2011-12 procurement season (April-June). The support price of other rabi crops such as barley, gram, masur, mustard seed and safflower has also been hiked by up to Rs 700 per quintal.
Khurshid said the government raised the MSP of rabi crops in a bid to offset the impact of higher input cost, like the hike in labour wages and increase in fertiliser and electricity prices. He said that the government has attempted a "difficult balance" while fixing the MSP in the wake of high food inflation which is in double digits (10.6 per cent) for the week ended October 8.
"We cannot be completely blind to the fact that there is inflationary pressure. While we balance to farmers, we also ensure that inflation does not get out of hand. This is also the very serious concern for us," he said. The government increased wheat MSP, notwithstanding opposition from ministries of food and finance which had said the hike could lead to a rise in retail prices.