Govt to give bonus to farmers

Food minister K V Thomas on Thursday said the government had decided to give bonus to farmers for rice procurement in the new season, which began this month. The move could help the government stoke inflation, and at the same time win political support too. "We have agreed to give a bonus to farmers. The government will take a decision soon," Thomas told reporters. The government currently pays local farmers Rs 1,080 ($22.061) for a tonne of rice.

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While increasing the price it pays farmers will help the government win political support ahead of a string of state elections next year, it could worsen already high inflation. India's food price index rose 9.32 percent in the year to October 1 , and the central bank's raising of interest rates a dozen times in the past 18 months has hardly helped rein in prices. Thomas said the government would procure at least as much rice as it did last year - a figure that stood at 33.6 million tonnes.

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"We have enough space to store new season rice," he said. Following a good monsoon, India is likely produce a record 245 mt of grain in 2011-12, up 1.4 percent from a year ago, raising hopes of more exports that could help bring relief to Asian importers trying to combat food-led inflation.