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 Potential impact of guaranteeing a MSP across all crops in India

  • Guaranteeing a MSP across crops would support farm incomes and spur consumption demand,said CRISIL.

  • CRISIL is a  Market Intelligence & Analytics said on Wednesday.

  • CRISIL estimating the “real cost” of such a guarantee at around ₹21,000 crore, based on Marketing Year (MY) 2023 trends.

  • While MSP-based procurement is done in only a few States, the firm said a guarantee will percolate its benefit to other regions

  • CRISIL’s analysis focused on 16 of the 23 crops for whom MSPs are announced, which account for over 90% of India’s farm output.

  • Our calculations show it will need a working capital of around ₹6 lakh crore in Marketing Year (MY) 2023. 

  • The real cost to the government, though, will be the difference between MSP and mandi prices,”

  • In MY 2023, when half the 16 crops traded above MSP and half below it, that would add up to ₹21,000 crore. 

  • The cost could be higher if the government offloads the commodities in mandis because then prices could fall further than what was seen in those markets in 2022-23.

  • In kharif 2022 and rabi 2023, just 9% of mustard production was procured, and 3% of five other crops.

  • In this milieu, guaranteeing MSP for all crops can lead to farmers moving to crops other than paddy and wheat



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Learnerz IAS | Concept oriented UPSC Classes in Malayalam: MSP on Crops UPSC NOTE
Learnerz IAS | Concept oriented UPSC Classes in Malayalam
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