The government on Wednesday raised the minimum support price (MSP) for paddy by 5.35 per cent to Rs 2,300 per quintal for the 2024-25 kharif marketing season.

The hike in paddy support price comes despite the government sitting on surplus rice stocks, but it is significant ahead of elections in states like Haryana, Maharashtra, Jharkhand, and Delhi.

Announcing the MSP increase, Information and Broadcasting Minister Ashwini Vaishnaw said the cabinet has approved the minimum support prices for 14 kharif (summer) crops based on recommendations from the Commission for Agricultural Costs and Prices (CACP).

The MSP for 'common' grade paddy has been raised Rs 117 to Rs 2,300 per quintal, while for the 'A' grade variety it has been hiked to Rs 2,320 per quintal for the upcoming kharif season, Vaishnaw told reporters.

This is the first cabinet decision taken in Prime Minister Narendra Modi's third term in office, the minister said.

Vaishnaw said the government had a clear policy decision taken in the 2018 Union Budget that MSP should be at least 1.5 times the cost of production, and this principle was followed in the latest MSP hike. The cost was scientifically calculated by CACP, he added.

The Food Corporation of India currently holds a record stockpile of around 53.4 million tonnes of rice, which is four times the required buffer for July 1 and sufficient to meet demand under welfare schemes for one year without any fresh procurement.

Despite lower rainfall of about 20 per cent across the country since the start of the monsoon season on June 1, weather conditions are now favourable for further advancement of the rains, according to the meteorological department.

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