UNION CABINET APPROVES MSP ON 14 KHARIF CROPS

TAG: GS 3: AGRICULTURE

THE CONTEXT: Recently, the Union Cabinet approved MSPs for 14 Kharif crops based on recommendations from the Commission for Agricultural Costs and Prices (CACP).

EXPLANATION:

• This decision aligns with the government’s policy, established in the 2018 Budget, to set MSP at least 1.5 times the cost of production for each crop.
• The Minimum Support Price (MSP) is the assured price at which the government purchases crops from farmers.
• This mechanism ensures that farmers receive a minimum return on their produce, providing a financial safety net against market price fluctuations.

Financial Impact and Support

• Union Information and Broadcasting Minister announced that this decision will result in farmers receiving approximately Rs 2 lakh crore as MSP, which is Rs 35,000 crore more than the previous season.
• This increment demonstrates the government’s commitment to supporting the agricultural sector.

MSP Increase for Various Crops

• The highest absolute increase in MSP has been recommended for oilseeds and pulses, reflecting the government’s focus on encouraging the cultivation of these essential crops.
• The following are the new MSPs for various Kharif crops:
  • Paddy: The MSP has increased by 5.35% (₹117) to ₹2,300 per quintal compared to ₹1,310 in 2013-14.
  • Cotton:
    • Normal variety: ₹7,121
    • Another variety: ₹7,521 (₹510 higher than the previous MSP)
  • Millets:
    • Jowar: ₹3,371
    • Ragi: ₹4,290
    • Bajra: ₹2,625
  • Maize: ₹2,225
  • Pulses:
    • Moong: ₹8,682
    • Tur: ₹7,550 (₹550 higher than the previous figure)
    • Urad: ₹7,400

Additional Cabinet Decisions

• Alongside the MSP approval, the Union Cabinet announced several significant projects aimed at boosting the country’s infrastructure and energy capabilities:
  • Offshore Wind Energy Projects
    • The Cabinet approved the development of 1 GW offshore wind energy projects in Gujarat and Tamil Nadu, with a total investment of Rs 7,453 crore. This initiative is part of India’s push towards renewable energy and reducing dependence on fossil fuels.
  • Vadhavan Port Development
    • A major decision was the approval for developing an all-weather greenfield deepdraft major port at Vadhavan in Maharashtra. The project, with a cost of Rs 76,200 crore, aims to create one of the top 10 ports in the world. This port will enhance India’s maritime infrastructure and boost trade efficiency.
  • Varanasi Airport Expansion
    • The Cabinet also approved a Rs 2,869.65 crore proposal for expanding Lal Bahadur Shastri International Airport in Varanasi. The expansion plan includes:
      • Construction of a new terminal building
      • Extension of the apron and runway
      • Parallel taxi track and other allied works
    • These expansions are expected to improve airport capacity, enhance passenger experience, and support regional economic growth.

Minimum Support Price (MSP)

• It is a form of market intervention by the Government of India to insure agricultural producers against any sharp fall in farm prices.
• The minimum support prices are announced by the Government of India at the beginning of the sowing season for certain crops on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP).
• MSP is a price fixed by the Government of India to protect the producer – farmers – against excessive falls in price during bumper production years.
• The Cabinet Committee on Economic Affairs (CCEA) of the Union government takes a final decision on the level of MSPs and other recommendations made by the CACP.
• In formulating the recommendations in respect of the level of minimum support prices and other non-price measures, the Commission takes into account, apart from a comprehensive view of the entire structure of the economy of a particular commodity or group of commodities, the following factors:-
  • Cost of production
  • Changes in input prices
  • Input-output price parity
  • Trends in market prices
  • Demand and supply
  • Inter-crop price parity
  • Effect on industrial cost structure
  • Effect on cost of living
  • Effect on general price level
  • International price situation
  • Parity between prices paid and prices received by the farmers.
  • Effect on issue prices and implications for subsidy

Commission for Agricultural Costs and Prices (CACP)

• The Commission for Agricultural Costs and Prices (CACP) was initially known as the Agricultural Prices Commission. It was renamed the Commission for Agricultural Costs and Prices in 1985.
• It is a statutory panel under the Ministry of Agriculture & Farmers’ Welfare, Government of India.
• The CACP is an expert body that recommends the MSPs of the notified Kharif and Rabi crops to the Cabinet Committee on Economic Affairs (CCEA).
• Composition of CACP
  • The CACP currently consists of 5 members:
    • A Chairman
    • A Member Secretary
    • One Official Member
    • Two Non-Official Members (representatives of the farming community)
  • Its suggestions are not binding on the Government.
  • The main objectives of CACP are:
    • To ensure meaningful real income levels to the farmers: CACP recommends MSPs to ensure that farmers receive a fair price for their crops, thereby ensuring a meaningful real income level.
    • To stabilize agricultural prices: The Commission helps maintain general price levels and protect non-producing consumers from violent fluctuations in food grain prices.
    • To protect the interest of the consumers: CACP ensures that essential agricultural commodities are available at reasonable rates through the public distribution system.

SOURCE: https://www.outlookindia.com/national/government-approves-msp-on-14-kharif-crops-ashwini-vaishnaw