Narendra Modi wants to increase agricultural support price to guarantee 50% profits to farmers

In a recent election speech BJP's prime ministerial nominee, Narendra Modi, promised farmers an assured profit of 50% by tweaking agricultural support price policy. The support price sets a floor at which the government is willing to buy all the quantity offered and covers a variety of crops. However, a big gap between stated policy and ground reality has resulted in support price policy helping large farmers in a handful of states growing wheat and paddy. Modi's idea will further distort a lopsided agricultural policy and send food inflation galloping. Elevated inflation, driven by escalating food prices, has been India's most serious macroeconomic challenge over the last five years. Implementation of Modi's idea will exacerbate the problem. India's agricultural price support policy has evolved into a mechanism that has largely helped farmers in northwest India and a few more states. Patchy ground presence of procurement agencies has meant that support price policy's benefits are limited.