SYLLABUS: GS MAINS PAPER 3
Recently, Centre has increased the Minimum Support Price (MSP) for wheat for the upcoming rabi season by 2% hike. Oil seeds and pulses such as Mustard, Safflower and Lentils saw higher MSP up to 8% hike in a bid to encourage crop diversification.
MINIMUM SUPPORT PRICE
1. MSP is a fixed price paid by the Government of India to farmers whenever they procure a particular crop.
In simple words, The MSP is the rate at which the government purchases crop from farmers.
2. MSPs help to incentivize the farmers and ensure adequate food grains production in the country.
3. It is announced by the Government of India at the beginning of sowing season.
4. Currently, rates are fixed for 23 crops, including six crops for upcoming rabi or winter season.
WHO RECOMMENDES MSP?
The Commission for Agricultural Costs and Prices (CACP) recommended the MSP and approved by Cabinet Committee on Economic Affairs (CCEA) chaired by PM of India.
FACTORS FOR DETERMINING MSP
1. Changes in input prices and cost of production.
2. Effect on Industrial Cost Structure, Effect on cost of living, Effect on general price level, Effect on issue prices and implication of subsidy.
3. International price situation, Trends in market prices and Inter-crop price parity.
4. Demand and Supply and Parity between prices paid and prices received by the farmers.
OBJECTIVES OF MSP
1. Support farmers from distress sales.
2. To procure food grains for public distribution.
CROPS COVERED UNDER MSP
1. Cereals: Paddy, Wheat, Maize, Bajra, Jowar, Ragi and Barley.
2. Pulses: Gram, Arhar/Tur, Moong, Urad and Lentil.
3. Oil Seeds: Rapeseed/Mustard, Groundnut, Sunflower, Soyabean, Safflower, Sesamum, and Nigerseed.
4. Commercial crops: Copra, Cotton, Raw jute, and Sugarcane (Fair and Remunerative price).
5. In addition, the MSPs of toria and de-husked coconut are fixed on the MSPs of rapeseed/mustard. One more crop virginia flu cured tobacco.
THE GOVERNMENT MOTIVE BEHIND THE RECENT HIKE IN MSP
1. To encourage diversification in production.
2. The income in MSP of rabi crops will ensure remunerative prices for farmers.
3. The government also said concerted efforts were made to realign the MSPs in favour of oil seeds, pulses and coarse cereals to encourage farmers to shift to the larger area under these crops and adopt the best technologies and farm practices, to correct demand and supply imbalance.
Hike in MSPs adversely affect exports by making Indian farm goods uncompetitive especially when International market prices are lower.
1. MSP of wheat for 2022-2023 has been raised by 2.03% as compared to 2021-22 from Rs 1,975 per quintal to Rs 2.015 per quintal.
2. MSP of masur (lentil) and mustard has been raised by 7.84% and 8.60% as compared to 2021-2022.
3. MSP of gram has been increased by 2.55% from Rs 5,100 quintal in 2021-2022 to Rs 5,230 per quintal in 2022-2023
The MSP play a crucial role in the procurement so procurement system of government should be streamlined and systematic measures are needed for farmers. Apart from crops, fruits and vegetables should also be announced.