Minimum Support Price (MSP)

The Government of India sets Minimum Support Price (MSP) for certain agricultural products. MSP is a safety net for farmers that ensures a minimum guaranteed price for their produce. MSP protects farmers from market fluctuations and ensures a fair return on their investment. 

  • The MSP is based on a calculation of at least one-and-a-half times the cost of production incurred by the farmers.
  • MSP is announced before the sowing season so that farmers can make an informed decision. 

Objectives 

  • Support farmers from distress sales at severely low prices
  • Procure foodgrains for public distribution
  • Incentivize farmers to grow crops that are short in supply

Benefits

  • Protects farmers from market fluctuations
  • Ensures a fair return on their investment
  • Ensures adequate food grain production in the country
  • Incentivizes farmers to grow crops that are short in supply
  • Has the potential to quadruple farmers’ income

Historical Background

  • The Government of India introduced the Minimum Support Price (MSP) in 1966-67.
  • The MSP was initially an incentive for farmers to adopt technology and increase agricultural productivity. 
  • The MSP was first introduced for wheat and later expanded to include other essential food crops. 
  • The MSP was introduced after India faced a major deficit in cereal production at the time of Independence. 
  • India was actively looking to shore up its food reserves and prevent shortages during the Green Revolution in the 1960s. 
  • The MSP is a “minimum price” for any crop that the government considers as remunerative for farmers and hence deserving of “support”.

Facts

Father of MSP Dr Frank W Parker
Ministry Mo Agriculture
Established in  1966
Discovered K Jha Committee
First crop Wheat
  • The first crop to get an MSP was wheat, which got an MSP fixed at 54 per quintal.
  • Now there are presently 23 Crops 

Cereals

  1. Paddy
  2. Wheat
  3. Barley
  4. Jowar
  5. Bajra
  6. Maize
  7. Ragi

Pulses

  1. Gram
  2. Arhar/tur
  3. Moong
  4. Urad
  5. Lentil

Oilseeds

  1. Groundnut
  2. Rapeseed/mustard
  3. Toria
  4. Soyabean
  5. Sunflower seed
  6. Sesamum
  7. Safflower seed
  8. Niger seed

Commercial crops

  1. Copra
  2. Raw cotton
  3. Raw jute
  4. De-husked coconut

Agriculture is the backbone of the Indian Economy”- said Mahatma Gandhi. Even today, the situation is still the same, with almost the entire economy being sustained by agriculture, which is the mainstay of the villages. It contributes 16% of the overall GDP and accounts for employment of approximately 52% of the Indian population. Rapid growth in agriculture is essential for the nation’s self-reliance and exports.

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