Centre Increases MSP for Rabi Crops

Context

The Cabinet Committee on Economic Affairs has increased the minimum support price (MSP) for rabi crops for the next marketing season of 2025-26.

Minimum Support Price (MSP)

• MSP is a form of market intervention by the Government of India to insure agricultural producers against any sharp fall in farm prices.
• The Government sets the MSP at the start of the sowing season, based on the recommendation of the Commission for Agricultural Costs and Prices (CACP).

Process of deciding MSP

• Recommendation: Commission for Agricultural Costs and Prices (CACP)
  • Attached office under the Ministry of Agriculture and Farmers’ Welfare.
  • It was established in January 1965 as the Agricultural Prices Commission and was renamed in 1985.
  • Composition: Chairman, Member Secretary, 1 official member and 2 non-official members.
    • The non-official members are representatives of the farming community.
  • Determinants of MSP
    • Demand and supply
    • Cost of production
    • Price trends in the market, both domestic and international
    • Inter-crop price parity
    • Terms of trade between agriculture and non-agriculture
    • A minimum of 50 percent as the margin over cost of production
    • Likely implications of MSP on consumers of that product.

• Decision Stage: Cabinet Committee on Economic Affairs (CCEA)
  • It is headed by the Prime Minister.
  • Presently it has 11 members including key Union Ministers like the Minister of Finance, Commerce and Industry, agriculture, and others.
  • It reviews and approves MSP levels
• Procurement is done by Food Corporation of India (FCI) and State agencies

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