Minimum support price hike for 14 kharif crops: Who benefits from MSP?

Farmers in the semi-arid states of the country have been grappling with unpredictable weather and a depleting groundwater table. Despite these challenges, the topic of Minimum Support Price (MSP) – the guaranteed price at which the government buys food grains from farmers – has remained a contentious political issue during successive central governments.

In a significant move that underscores its commitment to farmer welfare, the Narendra Modi-led National Democratic Alliance (NDA) government, referred to as Modi 3.0, announced a substantial hike in the MSP for 14 kharif (summer) crops on Wednesday. This policy, seen as one of the government's major agricultural reforms, aims to promote crop diversification and aligns with the central government's long-standing goal from its previous term to double farmers' incomes. Republic Business takes a deep dive. 

Pro-farmer step 

The higher MSP being set at 1.5 times production cost is seen as providing farmers a leeway, especially in view of the  inclement weather which has been causing adverse impact on crop yield by bringing it down sharply. 
From achieving bumper crops a few years back to now farmers suffering major losses, the worry of climate change is hitting where it hurts the most. In view of the climatic uncertainty and depleting water table, the highest MSP increase has been pressed for farmers sowing oilseeds and pulses. 

This segment will be benefitted the most. A spurt in MSP will also mean farmers will increasingly move towards crop diversification and choose less water-guzzling varieties of crop. As per the government, farmers will get Rs 2 lakh crore as MSP now, which comes after  it announced a 5.35 per cent increase in the minimum support price (MSP) for paddy, raising it by Rs 117 to Rs 2,300 per quintal for the 2024-25 kharif marketing season. 

Crop diversification 

The move of an MSP hike in paddy is likely to compound the issue of surplus rice stocks. However, the government’s announcement on MSP revision comes just ahead of the polls  in states like Haryana, Maharashtra, Jharkhand, and Delhi.

On Wednesday, Information and Broadcasting Minister Ashwini Vaishnaw announced that the cabinet has approved the MSP for 14 kharif (summer) crops. The decision is based on the recommendations from the Commission for Agricultural Costs and Prices (CACP).

In recent years, the government has been actively encouraging the cultivation of a variety of crops beyond traditional cereals, focusing on pulses, oilseeds, and nutrient-rich cereals. This promotion strategy has involved offering higher Minimum Support Prices (MSP) for these crops.

This year's MSP hike is anticipated to have a significant financial impact, amounting to Rs 2 lakh crore, which is approximately Rs 35,000 crore more than the previous season. This move is expected to substantially enhance farmers' incomes, providing a much-needed economic boost to the agricultural sector.