New Delhi, October 25
With crucial Assembly elections in Punjab and Uttar Pradesh due next year, the Union Cabinet today approved higher support prices for the 2011-12 Rabi season but failed to satisfy farmers who grow wheat.

The Minimum Support Price (MSP) for wheat has been fixed at Rs 1,285 a quintal, Rs 165 more than what was initially fixed last year (Rs 1,120). The government had then relented to sustained pressure from the farm lobby and declared an additional bonus of Rs 50 per quintal, making the MSP for wheat Rs 1,170.

This time too, Punjab Chief Minister Parkash Singh Badal was quick to condemn the hike as ‘pathetic’. Terming it a ‘Diwali shocker’, he demanded that the government raise the MSP to at least Rs 1,800 per quintal so as to enable farmers to cover rising input costs. With the wheat lobby raising its pitch, experts believe the government would declare a bonus this time too.

The Union Law Minister Salman Khurshid said after the cabinet meeting that it was a difficult balancing act since the government was also concerned over food inflation. The hike in MSP, he hoped, would allow farmers to take care of the rising diesel, electricity and other input costs.

The government’s strategy, however, was clearer in the support prices fixed for barley (Rs 980), gram (Rs 2,800), lentil (Rs 2,800), rapeseed, safflower and mustard (Rs 2,500). In some cases, the MSP has been raised by over Rs 2,000 a quintal.

Clearly, the government wants to wean away farmers to cultivate these crops in place of the usual rice and wheat. But the Punjab CM made no secret of his misgivings when he said that this policy would endanger food security of the entire country.

There has been persistent demand to raise the MSP of wheat to Rs 2,200 per quintal and even the Swaminathan Committee had recommended a formula that would have given farmers cultivating wheat a much higher MSP than what the government is willing to concede.

The Union Cabinet today also gave its approval to the new Manufacturing Policy, which seeks to create an additional employment of 100 million in 10 years. The other objective of the policy is to increase the share of manufacturing in the gross production, which is lagging behind at 16% at present. The new policy, by providing fiscal incentives to small and medium sector industries and by simplifying rules and providing an enabling environment, hopes to raise the share of manufacturing to 25%.

It is estimated that 220 million young adults will be joining the workforce in the next 10 years and hence the anxiety to give manufacturing a fillip.

The Cabinet also approved the National Optic Fiber Network to provide broadband facility at the panchayat level. At an estimated public outlay of Rs 20,000 crore (and a matching outlay by partners from the private sector), the scheme is expected to generate employment and facilitate e-education, e-health, e-agriculture, e-banking and other similar initiatives.

A World Bank study has estimated that 10% increase in broadband penetration leads to a GDP growth of 1.4%. The NOFN scheme, therefore, is expected to give a push to a double digit growth.