Overview of MSP Hike
- The Cabinet Committee on Economic Affairs, led by PM Narendra Modi, approved an increase in the Minimum Support Price (MSP) for 14 kharif crops for the marketing year 2025-26.
- The total financial outlay for procurement under MSP is estimated at ₹2.07 lakh crore.
- The MSP hike aims to provide remunerative prices to farmers, encouraging crop production and protecting farmer incomes.
Relevance : GS 3(MSP , Agriculture)
Specific Increases in MSP
- Highest absolute MSP increase is for:
- Nigerseed: ₹820 increase (from ₹8,717 to ₹9,537 per quintal)
- Ragi: ₹596 increase (from ₹4,290 to ₹4,886)
- Cotton: ₹589 increase for medium staple (from ₹7,121 to ₹7,710) and ₹589 for long staple (from ₹7,521 to ₹8,110)
- Sesamum: ₹579 increase (from ₹9,267 to ₹9,846)
MSP Margin over Cost of Production
- The expected profit margin (MSP minus production cost) is highest for:
- Bajra (Pearl millet): 63% margin
- Maize: 59% margin
- Tur (Pigeon pea): 59% margin
- Urad (Black gram): 53% margin
- Other kharif crops have margins around 50%, ensuring significant income above production costs.
Policy Alignment and Promotion of Nutri-Cereals
- The MSP hike aligns with the Union Budget 2018-19 commitment to maintain MSP at 1.5 times the weighted average cost of production nationally.
- The government is promoting nutri-cereals (“Shree Anna”) cultivation by offering higher MSPs, supporting diversification and nutrition security.
Procurement Trends
- Procurement of 14 kharif crops increased substantially:
- 7,871 lakh tonnes procured during 2014-15 to 2024-25.
- Compared to 4,679 lakh tonnes during 2004-05 to 2013-14.
- This rise indicates improved MSP implementation and government support mechanisms.
Implications
- The MSP hike is expected to:
- Enhance farmer incomes and rural livelihoods.
- Encourage crop diversification towards nutrient-rich crops.
- Support government goals of food security and agricultural sustainability.
- However, higher MSPs may lead to increased fiscal outlays and may require efficient procurement and distribution mechanisms.
