DNA Money Edit: Raise MSP to bring cheer to farmers

If India Meteorological Department (IMD)’s prediction on rainfall during this year’s monsoon season (June to September) holds true, 2018 will turn out to be the third consecutive normal monsoon after the back-to-back droughts of 2014 and 2015. The forecast which is in line with the outlook of other global and local weather agencies has brought cheers to India Inc.

The department has projected total rainfall to be 97% of the long-period average (LPA) of 89 cm, while Skymet has painted an even more optimistic picture – of 100% of the LPA. The probability that rainfall will be deficient (less than 90% of 50-year average) is 14%.

The normal rainfall, if indeed happens, will have a positive impact on India’s macroeconomic framework. The food inflation will ease while assuaging some of the farm distress. Surely, a normal monsoon is crucial to push economic growth that slowed last year under the two shocks of demonetisation and the goods and services tax (GST) rollout.

While rains indeed play an important role, the revival in the farm sector will depend on the prices that farmers receive. The government needs to take forward the proposed minimum support price policy to help the farmers who suffered from declining prices in the wake of a bumper harvest.