On Thursday, a bonus of Rs 50 over the minimum support price (MSP) was announced by the Govt, which was shocked by the reports of a drop in paddy arrivals and procurement. As of now, the common grade paddy has an MSP of Rs 850 per quintal, and the grade ‘A’ carries an MSP of Rs 880 per quintal.

However, once the bonus is applied,  the procurement price for the common variety would reach Rs 900 per quintal and that of grade ‘A’ variety would go up to Rs 930 per quintal.

After the meeting of CCEA, minister for science and technology Kapil Sibal, informed, “The Cabinet Committee on Economic Affairs (CCEA), on Thursday, approved the incentive bonus of Rs 50 per quintal on paddy over and above the minimum support price for the entire kharif marketing season of 2008-09.”

He aid that additional incentive has been introduced with the aim to increase procurement as well as output.  

Earlier this week, there was a down fall in both arrivals and procurement as compared to last year, since most farmers held on to their stocks in expectation of the bonus. The official sources had reported on 14th October, “The state-run agencies had procured 4.69 million tonne of paddy, down from around 4.84 million tonnes procured during the same period last year.”