The Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, on Tuesday accorded its approval to the increase in the Minimum Support Prices (MSPs) for all rabi crops of 2016-17 season.

According to the official release, the MSPs for wheat has been increased by Rs 100 to Rs 1,625 per quintal compared to last year. (1 quintal = 100 Kg)

Similarly, the MSP (all per quintal) for gram has been increased by Rs 500 to Rs 4,000, for masur (lentil) by Rs 550 to Rs 3,950, for rapeseed (mustard) by Rs 350 to Rs 3,700, for safflower by Rs 400 to Rs 3,700 and for barley by Rs 100 to Rs 1,325.

In addition, the government announced bonus to farmers to incentivise cultivation of pulses and oilseeds in order to reduce gap between demand and supply.

Although the recommendations of the Commission for Agricultural Costs and Prices (CACP) on the hike were accepted, the cabinet added bonus of Rs 200 per quintal for gram, Rs 150 per quintal for masur, Rs 100 per quintal for oilseeds to send strong signal to farmers to increase cultivation area and invest more for an increase in the productivity of these crops and to decrease the reliance on their import.

The increase in cultivation of leguminous pulses and oilseeds will also have additional environmental benefits as these crops are less water consuming and help in nitrogen fixation in the soil.

The Food Corporation of India (FCI) will be the designated the central nodal agency for price support operations for cereals, pulses and oilseeds. To supplement the efforts of FCI, the National Agricultural Cooperative Marketing Federation of India Limited (NAFED), National Cooperative Consumers' Federation (NCCF), Central Warehousing Corporation (CWC) and Small Farmers Agri - Business Consortium (SFAC) may also undertake procurement of oilseeds and pulses as per their capacity.

The government has already hiked MSP for Kharif crops.