Government hikes wheat support price to Rs1,350 per quintal

The government today announced an increase of Rs65 hike in the support price of wheat to Rs1,350 per quintal, against the Rs100 per quintal increase sought by the agriculture ministry.

The cabinet committee on economic affairs (CCEA) today approved the minimum support price (MSP) of wheat at Rs1350 per quintal for 2012-13 season to be marketed in 2013-14, finance minister P Chidambaram told reporters after the meeting.

The CCEA had not fixed the MSP of wheat while approving the MSPs of other rabi crops for 2012-13 crop year (July-June) in its November meeting. Instead it had asked the Committee on Agricultural Costs and Prices (CACP) to relook into the issue following differences between the agriculture and finance ministries.

The agriculture ministry had proposed a Rs100 per quintal increase in wheat support price while the finance ministry wanted it pegged lower.

The CACP had earlier suggested a freeze on wheat MSP at last year's level and provide a bonus of Rs40 per quintal to farmers.

While an increase in MSP would prompt farmers to increase the area under wheat crop, it would increase the government's subsidy burden to that extend.

The area under wheat stood at 25.3 million as of mid-December, marginally lower than 25.7 million hectare in the same period last year.