Increasing Famers’ Remuneration
The Government is promoting crop diversification towards oilseeds, pulses and shree anna/millets to enhance food security, increase farmers’ income, and reduce dependence on imports
The Minimum Support Price (MSP) is a crucial mechanism through which the government supports farmers by purchasing their crops at a predetermined price. Annually, the Government of India announces MSPs for 22 major agricultural commodities, including 14 Kharif crops, 6 Rabi crops, and 2 commercial crops. In addition, MSP for toria and dehusked coconut is also fixed based on MSPs of rapeseed & mustard, and copra, respectively.
Aligned with the commitment outlined in the Union Budget 2018-19, the Government has consistently raised MSPs to ensure they are set at least 50 per cent above the All India weighted average Cost of Production. Notably, this calculation includes considerations such as family labour, acknowledging the collective efforts of entire farming households rather than solely focusing on individual farmers.
Furthermore, the Government’s proactive measures have ensured enhanced procurement and timely payments to farmers, ensuring that the benefits of MSP hikes translate into tangible support. The procurement of foodgrains has increased from 761.40 lakh metric tonnes in 2014-15 to 1062.69 lakh metric tonnes in 2022-23, benefitting more than 1.6 crore farmers. The expenditure incurred (at MSP values) on procurement of foodgrains increased from Rs. 1.06 lakh crores to Rs. 2.28 lakh crores.
Notably, during the last 10 years (2014-24), the government spent Rs. 12.18 Lakh Crore to buy 6751 LMT of Paddy and Rs. 5.44 Lakh Crore to buy 3073 LMT of Wheat. This is a substantial increase as compared to the previous 10 years (2004-14) when the government spent Rs. 4.40 Lakh Crore to buy 4590 LMT of Paddy and Rs. 2.27 Lakh Crore to buy 2140 LMT of Wheat.
The procurement of foodgrain has increased from 761.40 lakh metric tonnes in 2014-15 to 1062.69 lakh metric tonnes in 2022-23, benefitting more than 1.6 crore farmers. The expenditure incurred (at MSP values) on procurement of foodgrains increased from 1.06 lakh crores to 2.28 lakh crores, during the same period.
It may be noted that the Government of India fixes Minimum Support Price (MSP) for 22 mandated agricultural crops on the basis of the recommendations of the Commission for Agricultural Costs & Prices (CACP), views of State Governments and Central Ministries/Departments concerned. Government in its Union Budget for 2018-19 had announced the pre- determined principle to keep MSP at levels of one and half times the cost of production. Accordingly, MSPs for all mandated crops kharif, rabi and other commercial crops have been increased with a return of at least 50 percent over all India weighted average cost of production from the agricultural year 2018-19.
To realize the objectives of MSP Policy, Government extends price support for paddy and wheat through the Food Corporation of India (FCI) and State Agencies. Under this policy food grains offered by farmers within the stipulated period & conforming to the specifications prescribed by Government are purchased at MSP by the State Government agencies and FCI for Central Pool. Additionally, Oilseeds, pulses and copra of Fair Average Quality (FAQ) are procured from registered farmers under Price Support Scheme under Umbrella Scheme of PM-AASHA, as per its guidelines at MSP in consultation with the concerned State Governments, when market price of these produce fall below the MSP. Cotton and Jute are also procured by the Government at MSP through Cotton Corporation of India (CCI) and Jute Corporation of India (JCI), respectively. Government’s price policy is to ensure remunerative prices to farmers by offering to procure their produce at MSP. However, farmers are free to sell their produce to the Government procurement agencies at MSP or in the open market, whichever is advantageous to them.
The increase in MSP for mandated Rabi Crops for Marketing Season 2024-25 is in line with the Union Budget 2018-19 announcement of fixing the MSP at a level of at least 1.5 times of the All-India weighted average Cost of Production. The expected margin over All-India weighted average Cost of Production is 102 percent for wheat, followed by 98 percent for rapeseed & mustard; 89 percent for lentil; 60 percent for gram; 60 percent for barley; and 52 percent for safflower. This increased MSP of rabi crops will ensure remunerative prices to the farmers and incentivise crop diversification.
The Government is promoting crop diversification towards oilseeds, pulses and shree anna/millets to enhance food security, increase farmers’ income, and reduce dependence on imports. Besides the Price Policy, the Government has undertaken various initiatives such as the National Food Security Mission (NFSM), Pradhan Mantri Krishi Sinchayee Yojana (PMKSY), and the National Mission on Oilseeds and Oil Palm (NMOOP) with the objective to provide financial support, quality seeds to encourage farmers to cultivate oilseeds and pulses.
Moreover, to extend the benefits of the Kisan Credit Card (KCC) Scheme to every farmer across the nation, Government has launched the Kisan Rin Portal (KRP), KCC Ghar Ghar Abhiyaan, and Weather Information Network Data Systems (WINDS) with the aim to provide timely and accurate weather information to empower farmers in making timely decisions regarding their crops. These initiatives aim to revolutionize agriculture, enhance financial inclusion, optimize data utilization, and improve the lives of farmers across the nation.
