{"id":116137,"date":"2024-06-20T19:37:12","date_gmt":"2024-06-20T14:07:12","guid":{"rendered":"https:\/\/pwonlyias.com\/stage\/?post_type=current-affairs&#038;p=116137"},"modified":"2025-02-13T15:59:41","modified_gmt":"2025-02-13T10:29:41","slug":"centre-revised-msp-for-14-crops","status":"publish","type":"current-affairs","link":"https:\/\/pwonlyias.com\/stage\/current-affairs\/centre-revised-msp-for-14-crops","title":{"rendered":"Centre Revised MSP For 14 Crops"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Recently<\/span><b>, <\/b><span style=\"font-weight: 400;\">Cabinet approved MSP hikes for all <\/span><b>14 kharif season crops.<\/b><\/p>\n<h2><span style=\"font-size: 18pt;\"><b>More On News<\/b><\/span><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">In alignment with the government\u2019s \u201cclear policy\u201d of keeping<\/span><b> MSPs at least 1.5 times above the cost of production<\/b><span style=\"font-weight: 400;\"> as calculated by the government<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">However,<\/span><b> only four of these crops<\/b><span style=\"font-weight: 400;\"> have MSPs that will provide farmers with a <\/span><b>margin of more than 50% <\/b><span style=\"font-weight: 400;\">above their production costs<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Bajra (77%)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Arhar dal (59%)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Maize (54%)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Black gram (52%)<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p style=\"text-align: center;\"><span class=\"vc_button\"><a href=\"https:\/\/www.pw.live\/batches\/upsc\/pw-only-ias?utm_source=seo+upsc+batch&#038;utm_medium=seo+upsc&#038;utm_campaign=seo&#038;utm_id=upsc\" target=\"_blank\" rel=\"noopener\">Enroll now for UPSC Online Classes<\/a><\/span><\/p>\n<table style=\"width: 100.201%;\">\n<tbody>\n<tr>\n<th style=\"border-style: solid; border-color: #000000; background-color: rgba(184, 165, 217, 0.53); text-align: left; vertical-align: middle; width: 100%;\"><span style=\"color: #000000;\"><b>Determinants Of MSP<\/b><\/span><\/p>\n<p><span style=\"color: #000000;\"><b>While recommending price policy of various commodities under its mandate, the Commission keeps in mind the various Terms of Reference (ToR) given to CACP in 2009.\u00a0<\/b><\/span><\/p>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400; color: #000000;\">Demand and supply<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400; color: #000000;\">Cost of production<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400; color: #000000;\">Price trends in the market, both domestic and international<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400; color: #000000;\">Inter-crop price parity<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400; color: #000000;\">Terms of trade between agriculture and non-agriculture<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400; color: #000000;\">A minimum of 50 percent as the margin over cost of production<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400; color: #000000;\">Likely implications of MSP on consumers of that product<\/span><\/li>\n<\/ol>\n<\/th>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2><span style=\"font-size: 18pt;\"><b>What is the Minimum Support Price?<\/b><\/span><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Minimum Support Price (MSP) is a <\/span><b>government-supported agricultural price policy<\/b><span style=\"font-weight: 400;\"> implemented in India to <\/span><b>ensure that farmers receive a fair and remunerative price<\/b><span style=\"font-weight: 400;\"> for their crops.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">MSP is price fixed by the <\/span><b>Government of India<\/b><span style=\"font-weight: 400;\"> to protect the <\/span><b>producer &#8211; farmers <\/b><span style=\"font-weight: 400;\">&#8211; against excessive fall in price during bumper production years.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Minimum support prices are a <\/span><b>guarantee price<\/b><span style=\"font-weight: 400;\"> for their produce from the Government.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">In case the <\/span><b>market price for the commodity falls below the announced minimum price<\/b><span style=\"font-weight: 400;\"> due to bumper production and glut in the market, government agencies <\/span><b>purchase the entire quantity offered by the farmers at the announced minimum price.<\/b><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Who Recommends?<\/b><span style=\"font-weight: 400;\"> : MSPs are announced by the Government of India at the <\/span><b>beginning of the sowing season<\/b><span style=\"font-weight: 400;\"> for certain crops on the basis of the <\/span><b>recommendations<\/b><span style=\"font-weight: 400;\"> of the <\/span><b>Commission for Agricultural Costs and Prices (CACP).\u00a0<\/b><\/li>\n<li aria-level=\"1\"><b>Final Decision: Cabinet Committee on Economic Affairs (CCEA) <\/b><span style=\"font-weight: 400;\">of the Union government takes a <\/span><b>final decision <\/b><span style=\"font-weight: 400;\">on<\/span> <span style=\"font-weight: 400;\">the level of MSPs and other recommendations made by CACP.<\/span><\/li>\n<\/ul>\n<h2><span style=\"font-size: 18pt;\"><b>Crops Under MSP<\/b><\/span><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The <\/span><b>Commission for Agricultural Costs &#038; Prices (CACP) <\/b><span style=\"font-weight: 400;\">recommends minimum support prices (MSPs) for 22 mandated crops and the<\/span><b> Department of Food &#038; Public Distribution<\/b><span style=\"font-weight: 400;\"> determines fair and remunerative prices (FRP) for sugarcane.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The mandated crops are <\/span><b>14 crops of the kharif season<\/b><span style=\"font-weight: 400;\">, <\/span><b>6 rabi crops <\/b><span style=\"font-weight: 400;\">and <\/span><b>two other commercial crops<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">In addition, the <\/span><b>MSPs of toria and de-husked coconut <\/b><span style=\"font-weight: 400;\">are fixed on the basis of the <\/span><b>MSPs of rapeseed\/mustard and copra<\/b><span style=\"font-weight: 400;\">, respectively.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Here is a list of some major crops for which MSP is typically announced:<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Kharif Crops (14)<\/b><span style=\"font-weight: 400;\">: Paddy, Bajra, Jowar, Maize, Arhar (Pigeon Pea), Ragi, Moong (Green Gram), Groundnut-in-shell, Urad (Black Gram), Soyabean, Niger seed, Sunflower, Sesamum, Cotton.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Rabi Crops (6)<\/b><span style=\"font-weight: 400;\">: Barley, Wheat, Gram, Rapeseed\/Mustard seed, Masur (Lentil), Jute.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Other Commercial Crops (2)<\/b><span style=\"font-weight: 400;\">: Copra, Safflower.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2><span style=\"font-size: 18pt;\"><b>Challenges Hindering MSP\u2019s Effectiveness<\/b><\/span><\/h2>\n<ul>\n<li aria-level=\"1\"><b>Limited Scope of Procurement: <\/b><span style=\"font-weight: 400;\">Despite MSPs being announced for multiple crops, the actual government procurement at <\/span><b>MSP is largely restricted to a few staples like wheat and rice<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span><\/li>\n<li aria-level=\"1\"><b>Regional Disparities in Procurement: <\/b><span style=\"font-weight: 400;\">MSP benefits are <\/span><b>disproportionately accessible to farmers in certain regions<\/b><span style=\"font-weight: 400;\">, particularly those in <\/span><b>Punjab and Haryana<\/b><span style=\"font-weight: 400;\">, where procurement infrastructure is robust.<\/span>\n<ul>\n<li aria-level=\"2\"><span style=\"font-weight: 400;\">In contrast, farmers in <\/span><b>eastern or northeastern regions<\/b><span style=\"font-weight: 400;\"> rarely benefit from MSP due to inadequate infrastructure and awareness.<\/span><\/li>\n<\/ul>\n<\/li>\n<li aria-level=\"1\"><b>Role of Middlemen: <\/b><span style=\"font-weight: 400;\">Despite MSP regulations, <\/span><b>middlemen often exploit farmer<\/b><span style=\"font-weight: 400;\">s, forcing them to sell their produce below the MSP, profiting from the differential.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Increasing food subsidy burden<\/b><span style=\"font-weight: 400;\">, prompting calls for rationalization.<\/span><\/li>\n<\/ul>\n<p style=\"text-align: center;\"><span class=\"vc_button\"><a href=\"https:\/\/store.pw.live\/govt-entrance-exams\/upsc-books\/upsc-textbooks?utm_source=SEO&#038;utm_medium=PW+Live&#038;utm_campaign=UPSC+Textbooks\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Check Out UPSC NCERT Textbooks From PW Store<\/span><\/a><\/span><\/p>\n<table style=\"width: 99.9975%;\">\n<tbody>\n<tr>\n<th style=\"width: 100%; border-style: solid; border-color: #000000; background-color: rgba(184, 165, 217, 0.53); text-align: left; vertical-align: middle;\"><span style=\"color: #000000;\"><b>CACP Projects Three Kinds Of Production Cost For Every Crop<\/b><\/span><\/p>\n<ol>\n<li><span style=\"color: #000000;\"><b>A2 <\/b><span style=\"font-weight: 400;\">&#8211; It covers all <\/span><b>paid-out costs directly incurred by the farmers <\/b><span style=\"font-weight: 400;\">in cash and kind on seeds, fertilizers, pesticides, hired labor, leased-in land, fuel, irrigation, etc.<\/span><\/span><\/li>\n<li><span style=\"color: #000000;\"><b>A2+FL<\/b><span style=\"font-weight: 400;\"> &#8211; It includes <\/span><b>A2<\/b><span style=\"font-weight: 400;\"> + An <\/span><b>imputed value of unpaid family labour<\/b><\/span><\/li>\n<li><span style=\"color: #000000;\"><b>C2<\/b><span style=\"font-weight: 400;\"> &#8211; It is a more<\/span><b> comprehensive cost<\/b><span style=\"font-weight: 400;\"> that factors in rentals and interest <\/span><b>forgone on owned land and fixed capital assets <\/b><span style=\"font-weight: 400;\">respectively, on top of A2+FL.<\/span><\/span><\/li>\n<\/ol>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"color: #000000;\"><span style=\"font-weight: 400;\">CACP considers both <\/span><b>A2+FL and C2<\/b><span style=\"font-weight: 400;\"> costs while <\/span><b>recommending MSP<\/b><span style=\"font-weight: 400;\"> while it reckons only <\/span><b>A2+FL cost for return<\/b><\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"color: #000000;\"><b>C2 costs<\/b><span style=\"font-weight: 400;\"> are used by CACP as <\/span><b>benchmark opportunity costs<\/b><span style=\"font-weight: 400;\"> to check if the MSPs recommended by them <\/span><b>at least cover these costs<\/b><span style=\"font-weight: 400;\"> in some of the major producing states.<\/span><\/span><\/li>\n<\/ul>\n<\/th>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2><span style=\"font-size: 18pt;\"><b>Way Forward<\/b><\/span><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Reduce the dominance <\/b><span style=\"font-weight: 400;\">of rice and wheat, the government can gradually expand the list of crops eligible for MSP support.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Improve and modernize procurement <\/b><span style=\"font-weight: 400;\">mechanisms to ensure that farmers have access to MSPs<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Alternate income models: I<\/b><span style=\"font-weight: 400;\">nstead of relying on MSP alone<\/span><b>, <\/b><span style=\"font-weight: 400;\">the government needs to explore <\/span><b>alternate models to boost farmer\u2019s<\/b><span style=\"font-weight: 400;\"> income like horticulture.<\/span><\/li>\n<\/ul>\n<table style=\"width: 100.13%;\">\n<tbody>\n<tr>\n<td style=\"width: 138.024%; 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