With an early election looming, the Government, which has been reeling under severe criticism over wheat imports at prices higher than that paid for domestic procurement, is set to correct its stance by substantially raising the minimum support price for the rabi crop.

As the UPA and the Left are set for another round of negotiations on Tuesday to avoid early elections, the Cabinet Committee on Economic Affairs (CCEA) will also be meeting to consider raising the MSP from Rs 750 to Rs 1,000 per quintal. This was a suggestion from the Commission on Agriculture Costs & Prices.

The proposed hike is whopping. The previous NDA Government had raised MSP by only Rs 50 over five years.

The CCEA may also look at a proposal to provide Rs 50 per quintal as bonus for kharif paddy procurement, which is currently on. The bonus will be in excess of the MSP of Rs 675 per quintal announced for Grade A and Rs 645 per quintal for common variety of grain. Agriculture Minister Sharad Pawar had met the Prime Minister Manmohan Singh last week on the issue of declaring the bonus for paddy so as to reduce the widening difference between MSP of rice and wheat. Singh is learnt to have agreed.

The CCEA is also likely to consider the recommendations of the EGoM headed by External Affairs Minister Pranab Mukherjee, that looked into the plight of sugar industry that has been adversely affected by the glut in sugar production.

Sources said the EGoM has recommended to make 10 per cent ethanol blending in petrol mandatory from middle of 2008. The EGoM is also learnt to have approved of providing soft loans to sugar factories against their excise payment to the government so as to make the sugar industry viable in the wake of glut in sugarcane production and declining sugar prices.

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