To pacify protesting farmers, govt to raise wheat support prices by 6%

The government is set to raise the state-mandated prices for winter-sown crops such as wheat later on Wednesday, two government sources said, as Prime Minister Narendra Modi tries to tackle rising discontent among farmers amid a price slump.

The government announces minimum support prices (MSPs) for most crops yearly to set a benchmark, although state agencies usually buy limited quantities of staples such as rice and wheat at those prices due to a lack of storage and funds. Market prices for many crops typically run well below MSPs.

This year, Modi's cabinet is expected to raise the MSP on wheat by Rs 105 ($1.44) to Rs 1,840 per 100 kg, the sources said, declining to be named ahead of an expected official announcement. The 6 per cent rise compares with a 7 per cent hike the previous season.

The farm ministry's Commission for Agricultural Costs and Prices (CACP) estimates that the average cost of production for wheat this crop season would be Rs 1,339, according to a government document reviewed by Reuters.