Why GoI increased the Minimum Support Price of Rabi Crops?

The Government of India increased the Minimum Support Price (MSP) of rabi crops on September 21, 2020. The MSP on Wheat has been increased by Rs 50 per quintal. The other crops for which MSP has been increased includes Chana, Mustard, Safflower and Masoor.

Key Facts

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

Why MSP has been increased?

The decision to increase the MSP was taken in the aftermath of ongoing protests in Punjab and Haryana over the passage of two farm bills- the 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.

Minimum Support Price

The minimum support price is an agricultural product price that is set by the government of India in order to purchase directly from the farmer. This rate acts as a safeguard for the farmer as it provides a minimum profit for the harvest irrespective of the market conditions. In India, a committee set up under the M. S. Swaminathan in 2006 had recommended that the MSP must be at least 50% more than the cost of production

Who fixes the MSP?

The MSP is fixed on the recommendations of 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 Government fixes the price based on the recommendations and circulated to the state governments and various other concerned ministries.

Who Procure the food?

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