MSP: Higher MSP to boost Rabi sowing
New Delhi| The Finance Ministry, in its latest monthly review, has projected a significant increase in Rabi crop sowing and production in the coming months. The ministry said this increase will be possible due to the high Minimum Support Price (MSP), favorable monsoon and adequate reservoir level.
The ministry stressed that the Rabi season is likely to benefit from the strong foundation established by the good Kharif crop earlier this year. This bumper crop is also expected to help reduce domestic retail inflation, which was boosted by food price pressures in October.
“As of 6 November 2024, paddy procurement reached 161.0 lakh metric tones, benefiting 14.79 lakh farmers from the ongoing KMS procurement operations”, the ministry said. Record kharif food grain production with increased MSP will further strengthen the rural economy.”
Rabi crops are sown in winter and harvested in spring, while kharif crops are sown at the beginning of monsoon and harvested in autumn. Rabi crops require a cool and dry climate, while Kharif crops require a hot and humid climate. It also said that “the bumper crop of Kharif is expected to reduce food inflation in the coming months”. Favorable monsoon, adequate reservoir level and high minimum support price are likely to boost Rabi sowing and production”.
According to the ministry, food inflation in October was mainly due to supply disruption due to heavy rains in major producing states. This led to a surge in prices of essential vegetables like tomatoes, onions and potatoes. Additionally, higher global prices contributed to inflation in edible oils and fats.
However, the bountiful Kharif crop is expected to stabilize food prices and provide relief to consumers in the coming months. The report also highlighted strong demand trends in the economy, with steady growth in both urban and rural areas. Sales volumes of fast-moving consumer goods (FMCG) improved during Q2FY25, reflecting strong consumer confidence. Rural demand has been particularly noteworthy according to the report. Tractor sales figures were record-breaking and two-wheeler sales figures were quite strong in October 2024.
“Demand continues to rise steadily, as indicated by an improvement in FMCG sales volumes in Q2FY25 in both urban and rural areas”, the report said On the supply side, the ministry said economic activity remains healthy, with the Purchasing Managers’ Index (PMI) for manufacturing and services indicating strong performance in the secondary and tertiary sectors.
With favorable conditions and government support, the Rabi season is set to boost agricultural growth while supporting macroeconomic stability. The ministry hopes that the combined impact of these factors will not only boost production but also relieve inflationary pressures in the near future.
