The Union Cabinet on Wednesday approved an increase in the Minimum Support Price (MSP) for 14 Kharif crops, including paddy, ragi, bajra, jowar, maize, and cotton which cause the rally in Fertilizer Stocks. This decision will result in a financial implication of Rs 2 lakh crore for the government, while ensuring a gain of Rs 35,000 crore for farmers over the previous season.
Addressing the media after the Cabinet meeting, Information and Broadcasting Minister Ashwini Vaishnaw underscored the significance of Prime Minister Narendra Modi’s third term, which focuses on continuity with change through numerous decisions aimed at farmers’ welfare.
Summary of MSP Hike and its Implications
The Union Cabinet recently announced an increase in the Minimum Support Price (MSP) for 14 Kharif-season crops, including major staples such as paddy, ragi, bajra, jowar, maize, and cotton.
Key Details of MSP Hike:
- Scope: The MSP increase covers 14 Kharif crops.
- Financial Implications:
- Government: Approximately ₹2 lakh crore.
- Farmers: An estimated gain of ₹35,000 crore over the previous season.
- Percentage Increase: Ranges between 1.4% and 12.5%.
- Paddy: 5.35% rise in MSP.
- Oilseeds and Pulses: Highest absolute increases.
Economic Impact:
- Boost to Farmers’ Income: Expected to significantly enhance farmers’ incomes.
- Stock Market Reaction: Positive impact on sectors like FMCG, auto, and consumer durables.
- Indices Performance: Gains up to 0.50% in Nifty FMCG, Nifty Auto, and Nifty Consumer Durables.
- Fertiliser Stocks: Significant gains in stocks like Chambal Fertilisers & Chemicals, National Fertilizers, and Rashtriya Chemicals & Fertilizers (RCF).
Analysts’ View on Fertiliser Sector:
- Positive Outlook: Strong performance expected with higher tops and bottoms on medium-term charts.
- Target Prices:
- Chambal Fertilisers & Chemicals: ₹580 (first target), ₹765 (second target).
- National Fertilizers: ₹185 (first target), ₹255 (second target).
- RCF: ₹275 (first target), ₹370 (second target).
Broader Economic and Policy Implications:
- Prime Minister’s Commitment: Reflects commitment to farmers’ welfare and agricultural sector growth.
- PM-KISAN Scheme: Release of the 17th installment amounting to over ₹20,000 crore to 9.26 crore farmers.
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