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 Why in news

  • The Union Cabinet gave its nod to raise the minimum support price (MSP) for paddy by 5.35% to ₹2,300 a quintal for the 2024-25 kharif marketing season, a decision that comes ahead of the Assembly elections in Haryana, Maharashtra, Jharkhand and Delhi.

  • The Cabinet approved MSP hike for all 14 kharif season crops, in alignment with the government’s “clear policy” of keeping MSPs at least 1.5 times above the cost of production as calculated by the government

  • However, only four of these crops have MSPs that will provide farmers with a margin of more than 50% above production costs.

Minimum Support Price (MSP)

  • It is a form of market intervention by the Central Government to insure agricultural producers against any sharp fall in farm prices.

  • It protects the producer- farmers against distress sale during bumper production years.

  • The Union Government sets a MSP for 22 crops before the sowing period every year, based on a formula of one-and-a-half times production costs

  • MSP is fixed on the recommendations of the Commission for Agricultural Costs and Prices (CACP), an apex advisory body for pricing policy under the Ministry of Agriculture

  • It is implemented mostly for rice and wheat mainly because India has vast storage facilities for these grains and uses the produce for its public distribution system (PDS).

  • It takes into account both paid-out costs such as seeds, fertilisers, pesticides, fuel, irrigation, hired workers and leased-in land, as well as the imputed value of unpaid family labour.

  • However, there is currently no statutory backing for these prices, nor any law mandating their enforcement

  • A farmer cannot demand MSP as a matter of right.

Kharif Crops (total 14) 

  • Paddy, jowar, bajra, maize, ragi, tur/arhar, moong, urad, groundnut, soyabean, sunflower, sesamum, niger seed, cotton



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