Prices of pulses have been under stress and the food has remained high due to expensive pulses. To bring down prices of pulses and incentivise farmers the government has approved an increase in MSP (minimum support price) of pulses and other farm products.

“Govt's MSP increases emphasize commitment to low inflation, incentivize pulses production & respond to farmers' concerns at time of stress,” tweeted chief economic adviser Arvind Subramanian.

The new MSP of tur dal for the 2015-16 season will be Rs 4,625 per quintal, moong will be Rs 4,850 per quintal and for urad, it will be Rs 4,625 per quintal. The MSPs in case of pulses includes a bonus of Rs 200 per quintal. 

Incidentally, the prevailing market price of all three varieties of pulses is more than the MSP, moreover, there is limited government procurement in the same. In the retail markets, urad is selling at Rs 112 per kg, up from Rs 72 a year ago, while moong is being quoted at Rs 103 per kg up from Rs 97 a year-ago, while arhar is at Rs 113 per kg, up from 72 a year-ago.

India imports around four million tonnes of pulses each year as domestic production is well short of the demand, while the same is the case with edible oils, where the country is expected to import a record almost 14 million tonnes in 2015-16, up from 13.5 million tonnes in 2014-15.

The new MSP of common grade paddy for the 2015-16 procurement season that will start from October will be Rs 1,410 per quintal, while that of Grade 'A' paddy will be Rs 1,450 per quintal.

The increase in MSP is much below the Bharatiya Janata Party's 2014 election promise of giving farmers MSP, which is 50 per cent more than the cost of production. The reason could be that the input costs have been low.

In kharif oilseeds, the MSP of groundnut has been increased by Rs 30 per quintal to Rs 4,030, while that of yellow soybean has been increased by Rs 40 per quintal to Rs 2,600. The MSP of sunflower seed has been raised by Rs 50 per quintal from Rs 3,750 per quintal to Rs 3,800 per quintal.

The MSP of maize, which is one of main coarse cereals grown during the kharif season has been raised by Rs 15 per quintal, while that of cotton has been increased by Rs 50 for both medium and long staple. The new MSP of medium staple cotton is Rs 3,800 per quintal, while that of long staple ones is Rs 4,100.

YES Bank report said modest increase in MSPs would help keep a tab on the food subsidies, as the procurement cost would remain restrained.