Higher MSP to Boost Rabi Sowing, Strengthen Rural Economy: Finance Ministry
In its recent monthly assessment, the Finance Ministry has forecasted a substantial increase in Rabi crop sowing and production in the upcoming months.
The ministry attributed this optimistic projection to higher minimum support prices (MSP), a favorable monsoon, and adequate reservoir levels.
The ministry emphasized that the strong Kharif yield earlier this year is likely to have a favorable effect on the Rabi season. This plentiful harvest is also expected to ease domestic retail inflation, which had risen in October due to food price pressures.
As of November 6, 2024, paddy procurement reached 16.10 million metric tonnes, benefiting 1.479 million farmers through the ongoing KMS procurement activities. The ministry stated that the record Kharif food grain production along with higher MSPs will further strengthen the rural economy.
Rabi crops are sown in winter and reaped in spring, while kharif crops are planted at the start of the monsoon season and gathered in autumn. Rabi crops flourish in cold, dry conditions, whereas kharif crops need a hot, wet environment.
Furthermore, it was noted that a substantial kharif harvest is anticipated to reduce food inflation in the upcoming months. Favorable monsoon conditions, sufficient reservoir levels, and increased minimum support prices are expected to enhance Rabi planting and production.
The ministry stated that food inflation in October was mainly caused by supply disruptions due to heavy rainfall in key producing states, leading to price hikes in essential vegetables like tomatoes, onions, and potatoes.
Furthermore, the increase in global prices has led to inflation in edible oils and fats. Nevertheless, the plentiful Kharif harvest is expected to stabilize food prices and provide relief to consumers in the coming months.
The report also highlighted robust demand trends in the economy, demonstrating steady growth in both urban and rural areas. In the second quarter of FY25, sales volumes of fast-moving consumer goods (FMCG) rose, reflecting strong consumer confidence.
With supportive conditions and government support, the Rabi season is poised to boost agricultural growth and contribute to overall economic stability.
The ministry is optimistic that these combined factors will not only raise production but also help reduce inflationary pressures in the short term.