New Delhi: Despite the protest from Ministry of Food, the Central government on Wednesday had to buckle under the demand of state governments to pay a bonus of Rs 50 per quintal on the Minimum Support Price (MSP) of Rs 1,120 on wheat.

Rejecting the storage problems highlighted by the Food Ministry, the Ministry of Agriculture passed the proposal in the Cabinet, but a formal announcement is yet to be made regarding this.  The Agriculture Minister, Sharad Pawar, agreed to pay a bonus of Rs 50 per quintal on the MSP of wheat of Rs 1,120.

According to sources, the Food Ministry opposed the proposal of paying bonus on the purchase of wheat, as it lacks the storage facility. Currently the Food Corporation of India (FCI) is facing storage problem.

The contention of the Ministry was that, “If a bonus of Rs 50 was given on the purchase of wheat, it would increase its supply in the market. In such a scenario, FCI would have to purchase the wheat at minimum support price on its buying centre. It might raise problems for the FCI.”

On the contrary, the Agriculture Ministry said, “The arrival of wheat in government warehouses will be possible only if farming is encouraged. Thus, it is necessary to provide bonus on the purchase of wheat.”

The proposal was passed only when a consensus emerged in the Cabinet. The senior officials of Food Ministry and Agriculture Ministry confirmed the decision on bonus.

Currently, the warehouses of FCI contain previous year’s stock of wheat which is nearly 4.71 million tonnes. In the current Rabi procurement year, nearly 2.62 billion tonnes of wheat is expected to be produced. FCI has the capacity to store only three billion tonnes of wheat. In this situation, the wheat will be stored in the open and it may raise problems for the FCI.