Govt weighs 3-8% increase in MSP for kharif crops

The MSP for common and grade A paddy varieties could see a 3-7% increase to the range of ₹2,100-2,200 per quintal, one of the two people said, requesting anonymity. For maize, the MSP is likely to be raised to ₹2,050-2,100 per quintal from ₹1,962 a year ago.

The MSP serves as a crucial safety net for farmers in India by guaranteeing a minimum price for their produce. It also helps ensure food security and stabilizes market prices of staples. The government also uses the MSP to encourage farmers to cultivate certain crops.

The MSP of kharif pulses is expected to be raised by 6-8%, with tur (arhar) and urad likely to be set at nearly ₹7,000 per quintal and moong expected to reach ₹8,400-8,450 per quintal, potentially the season’s highest among key cereals and pulses, the person said.

In the 2022-23 season, the government fixed the MSP for tur and urad at ₹6,600 and moong at ₹7,755 per quintal. Tur, which accounts for nearly 15% of India’s pulse production, is primarily cultivated in Maharashtra, Karnataka, Madhya Pradesh, and Gujarat. This season, tur prices have soared to ₹10,000 per quintal due to production disruptions caused by erratic weather conditions, especially in October.

Oilseeds’ MSP is likely to be increased by 7-8%. While groundnut seeds may be set between ₹6,200 and ₹6,300 per quintal, soya bean (yellow) seeds could be fixed at ₹4,500-4,600 a quintal, the people said. The MSPs stood at ₹5,850 per quintal for groundnut seed and ₹4,300 for soya bean seed last year.

The final decision on the MSP will rest with the Cabinet Committee on Economic Affairs. The Centre sets the MSP of kharif and rabi crops in June and October, respectively, before the beginning of the respective seasons. The MSP is set to ensure that farmers get at least a 50% return on the cost of production.

An agriculture ministry spokesperson declined to respond to specific queries, citing their speculative nature. “The Commission for Agricultural Costs and Prices (CACP) recommends MSPs for more than 22 crops. The Cabinet considers the recommendations of the CACP, and then decision is taken by the government."

Farm experts said farm wages are stagnating despite the sector recording a robust 5.5% growth in GDP in the March quarter. “To increase farmers’ income, the CACP must consider Swaminathan commission’s recommendation to give 50% return on the C2, not only on A2 and FL on some crops," said Devinder Sharma, an agriculturist and food policy expert.

C2 stands for comprehensive cost, or the actual cost of production, while A2 covers all paid-out costs directly incurred by the farmer in cash and kind on seeds, fertilisers, pesticides, hired labour, leased-in land, fuel, and irrigation, among others. A2+FL includes A2 plus an imputed value of unpaid family labour (FL).

The Centre announces the MSP of 14 kharif crops in June every year. The crops include jowar, bajra, ragi, sunflower seed, sesame seeds, and cotton. Though the government raises the MSP of 24 crops, including rabi crops, every year, the implementation of the scheme varies, said a senior official with a national farmers’ association, seeking anonymity.

“Crop procurement at the MSP only takes place for wheat and paddy. Procuring all the 24 crops at the MSP is challenging for the government due to lack of proper infrastructure," the person said.

“Farmers suffer due to late payments, and there is no certainty of payment until they get paid. In some regions, farmers get their payments within three days, and there are some places where they receive the payment after three-four months of the procurement. Farmers incur losses if there is any mishap with the procured quantity until they finally get the payment," the official added.

With the Union cabinet on Wednesday clearing a ₹1 trillion scheme to increase foodgrain storage capacity by 70 million tonnes in the cooperative sector, India will have the world’s largest grain storage plan. Storage facilities will be available for nearly three-fourths of food grains produced in the country.

The official further said the government uses up 35% of its allocated funds for procurement in transportation, labour, and other costs every year.