GoI increases Minimum Support Price of Rabi Crops

Published: September 21, 2020

On September 21, 2020, the Government of India increased the Minimum Support Price of rabi crops. The MSP of wheat has been increased by Rs 50 per quintal. The other crops are Chana, Mustard, Safflower and Masoor.

Highlights

The key decision to increase MSP was taken at the meeting of Cabinet Committee on Economic Affairs. The GoI has disbursed Rs 1.13 trillion as MSP to farmers for rabi crops. This includes pulses, wheat, oil seeds. The MSP of grams has been increased by 8.3%, mustard by 7% and barley by 5.7%.

Background

The Minimum Support Price of the Rabi crops are being increased in the backdrop of widespread protests in Punjab and Haryana over the passage of two farm bills in the Parliament. The bills were Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 and the Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020

The Food Processing Minister Harsimrat Kaur Badal recently resigned over the issue.

Minimum Support Price

The MSP is fixed based on the recommendations made by the Agricultural Costs and Prices Commission. The commission recommends the prices after visiting to the states for on-spot assessment of constraints faced by farmers in selling their produce. The GoI fixes the price based on the recommendations and circulated to the state governments and various other concerned ministries.

The Food Corporation of India is the nodal agency to undertake procurement of crops.

Swaminathan Committee

The Swaminathan Committee set up in 2004 has a major role when it comes to the Minimum Support Price System in India. The National Commission on Farmers was formed under the leadership of M S Swaminathan in 2004. In 2006, the committee recommended that the MSP must be at least 50% more than the cost of production. The committee mainly discussed three types of costs to be included during procurement. They are as follows

  • A2: It is the type of cash expenditure used to generate crop. This includes seeds, chemicals, manure, fuel cost, labour cost and irrigation cost.
  • A2+FL: It includes A2 and the value of unpaid family labour
  • C2: This includes A2, FL and the land rent and cost of interest on the money borrowed for farming.

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