More than two months into the rabi sowing season, the Cabinet Committee on Economic Affairs approved a hike of Rs. 65 a quintal in the minimum support price of wheat and allowed an additional export of 2.5 million tonnes to liquidate stocks. Wheat MSP will now be Rs. 1,350.

The announcement of the MSP has been delayed, impacting the area under wheat, which is lower than the coverage in the corresponding period last year. The Commission for Agricultural Costs and Prices (CACP) earlier recommended a freeze on wheat MSP, and said stocks should be reduced to create space for the new harvest. After the Cabinet asked it to review its decision, the CACP suggested a bonus of Rs. 40 per quintal but in a fresh view, the Agriculture Ministry proposed a hike of Rs. 100. However, CCEA on Wednesday approved an increase of Rs. 65.

“The CCEA has decided to keep wheat MSP at Rs. 1,350 per quintal for the 2013-14 marketing year, which is higher by Rs. 65 than last year,” Finance Minister P. Chidambaram told journalists after a Cabinet meeting. It is learnt that the Finance Ministry was not in favour of a steep hike, as it would fuel inflation as well as enhance the food subsidy bill.