Context:

• The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, approved the increase in Minimum Support Prices (MSP) for 14 Kharif crops on 28 May 2025.
• The objective of this decision is to ensure remunerative prices for farmers and make agriculture more profitable.

Major Crops with Notable Increases:

• Niger Seed (Ramtil): ₹820/quintal – highest increase, reflecting strategy to boost oilseed production.
• Ragi: ₹596/quintal – promoting nutritious millets (Shri Anna).
• Cotton: ₹589/quintal – significant for cotton-growing states like Gujarat and Maharashtra.
• Sesame: ₹579/quintal – supports self-reliance in oilseeds.
• Paddy: ₹69/quintal – affects a large number of farmers due to its staple status.

Pulses:

• Tur (Arhar): ₹450/quintal
• Moong: ₹86/quintal
• Urad: ₹400/quintal

Oilseeds:

• Groundnut: ₹480/quintal
• Sunflower Seed: ₹441/quintal
• Soybean: ₹436/quintal

Margin (Return over Cost):

• Bajra: 63% – highest
• Maize and Tur: 59%
• Urad: 53%
• All other crops: Minimum 50% margin

Budget Promise Reference:

• This hike aligns with the 2018–19 Union Budget promise of setting MSP at 1.5 times the cost of production.

Economic and Social Impact:

• Increase in Farmers’ Income:

Higher MSP shields farmers from market volatility, especially beneficial for small and marginal farmers, who form    over 80% of India’s farming community.

• Toward Self-Reliance:

Increased MSP for oilseeds (ramtil, sesame, groundnut, soybean) and pulses (tur, urad) will reduce dependence    on imports. India currently imports significant quantities of edible oils and pulses.

• Nutritional Security and Crop Diversification:

Boost to millets like ragi and pulses improves food security, enhances soil fertility, and supports environmental sustainability.

Increase in Procurement and Financial Support:

• Paddy procurement (2014–15 to 2024–25): 7,608 LMT – 66% increase from 4,590 LMT in 2004–14.
• Procurement of all 14 Kharif crops: 7,871 LMT – 68% more than the previous decade (4,679 LMT).
• MSP payment for paddy: ₹14.16 lakh crore – 3 times the ₹4.44 lakh crore in 2004–14.
• Total MSP payment for Kharif crops: ₹16.35 lakh crore – 3.4 times higher than ₹4.75 lakh crore in the previous decade.

Policy Significance:

• Crop Diversification:
• Increased MSP for oilseeds and pulses encourages farmers to shift from traditional crops like rice and wheat to other alternatives, contributing to environmental and economic sustainability.
• Promotion of Nutritious Grains:
• Encouraging cultivation of Shri Anna (ragi) can help tackle malnutrition in rural areas.

Electoral Strategy:

• The decision precedes assembly elections in states like Jharkhand, Maharashtra, and Delhi, and is likely to bolster the government's image among the farming community.

Challenges:

• Limitations of Procurement System:

The effectiveness of MSP depends on efficient procurement. Many states face issues like lack of mandis, warehouses, administrative bottlenecks, and middlemen.

• Market Price vs. MSP:

For some crops, market prices may be higher than MSP, limiting MSP's relevance. However, MSP provides a safeguard when market prices fall.

• Limited Scope:

MSP is applicable only to 23 crops, excluding horticulture and many cash crops.

Long-term Impact:

• Aatmanirbhar Bharat:

Supports the goal of self-reliance in pulses and oilseeds by 2027 by reducing imports.

• Farmer Empowerment:

Higher MSP and procurement lead to more stable farmer incomes, aiding the goal of doubling farmer income.

• Nutrition and Environment:

Incentivizing nutritious grains and pulses improves food security and environmental sustainability.

Minimum Support Price (MSP): Overview

• Definition:

It is the minimum price at which the government guarantees to purchase crops from farmers, even if market prices fall below it.

• Introduction: 1966–67 (for wheat)
• Announcing Authority: Ministry of Agriculture and Farmers Welfare, Government of India
• Recommending Body: Commission for Agricultural Costs and Prices (CACP)
• Frequency of Announcement: Twice a year – for Kharif and Rabi seasons
• Current Scope:
• CACP recommends MSP for 22 crops. For sugarcane, it recommends Fair and Remunerative Price (FRP).

Crops Covered Under MSP:

• Cereals: Paddy, Wheat, Barley, Ragi, Maize, Jowar, Bajra
• Pulses: Chana, Tur, Moong, Urad, Masoor
• Oilseeds: Groundnut, Rapeseed/Mustard, Soybean, Sesame, Sunflower, Safflower, Niger seed
• Commercial Crops: Copra, Sugarcane, Cotton, Raw Jute