Cabinet Approves Increased MSP for Rabi Crops for Marketing Season 2025-26
Context:
Recently, the Cabinet Committee on Economic Affairs (CCEA) approved an increase in the Minimum Support Prices (MSP) for all mandated Rabi crops for the marketing season 2025-26.
Relevance:
GS-02 (Government policies and interventions)
Key Highlights:
- Increase in MSP for Rabi Crops:
The government has significantly raised the MSP for Rabi crops. The highest increase is for Rapeseed & Mustard, with an MSP hike of ₹300 per quintal, followed by Lentil (Masur) at ₹275 per quintal. Other crops also saw MSP increases, including:
- Gram: ₹210 per quintal
- Wheat: ₹150 per quintal
- Safflower: ₹140 per quintal
- Barley: ₹130 per quintal
- MSP for Marketing Season 2025-26 (in ₹ per quintal):
- Wheat: ₹2425 (₹150 increase)
- Barley: ₹1980 (₹130 increase)
- Gram: ₹5650 (₹210 increase)
- Lentil (Masur): ₹6700 (₹275 increase)
- Rapeseed & Mustard: ₹5950 (₹300 increase)
- Safflower: ₹5940 (₹140 increase)
- Cost of Production and Margins:
The new MSP rates ensure a margin of at least 1.5 times the All-India weighted average cost of production. The expected margin for different crops is:- Wheat: 105%
- Rapeseed & Mustard: 98%
- Lentil: 89%
- Gram: 60%
- Barley: 60%
- Safflower: 50%
- Cost Components:
The MSP is calculated based on all paid-out costs, including expenditures on human labour, machine labour, material inputs (seeds, fertilizers, manures), irrigation, diesel, electricity, and the imputed value of family labour. - Rationale Behind MSP Hike:
This increase in MSP is in line with the Union Budget 2018-19 announcement to fix MSP at a minimum of 1.5 times the cost of production. The move is expected to boost farm incomes, ensure price stability, and support crop diversification.
About MSP:
- The Minimum Support Price (MSP) serves as a form of government intervention in the market to safeguard agricultural producers from significant declines in farm prices.
- Announced by the Government of India at the outset of the sowing season for specific crops, these prices are determined based on recommendations from the Commission for Agricultural Costs and Prices (CACP).
- The MSP is established by the government to shield farmers from sharp price drops during periods of abundant production. It provides farmers with a guaranteed price for their produce, ensuring protection from market fluctuations.
- When market prices for a commodity plummet below the announced minimum, government agencies step in to purchase the entire quantity offered by farmers at the designated minimum price.
Conclusion:
By raising the MSP for key Rabi crops, the government continues to prioritize the welfare of farmers, ensuring that they receive fair compensation for their efforts. This decision also supports the overall objective of promoting sustainable agriculture and incentivizing farmers to diversify their crop production.
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