India: Revised MSPs is 47% lower for majority of the 14 crops

Published 2022년 6월 11일

Tridge summary

Analysis by Crisil reveals that the Indian government's minimum support prices (MSPs) for 14 crops have been ineffective due to low intake and significant price disparities between support and market pricing. Despite an average increase of 6% in MSPs for the Kharif marketing season 2022-23, the scheme has not benefited farmers as the procurement rates are low, and the prices do not align with market rates. The report highlights a misalignment between the Commission for Agricultural Costs and Prices (CACP) assessment of production costs and the real costs, primarily due to increased diesel prices and pesticide costs. The situation is further complicated by rising labor and irrigation costs, which account for a significant portion of farming costs. The report suggests that farmers may be better off selling in the open market, as the MSP for some crops like cotton is significantly lower than mandi prices.

Disclaimer:The above summary was generated by Tridge's proprietary AI model for informational purposes.

Original content

According to a Crisil analysis, the MSP is inefficient because of the low intake and large price discrepancies between support and market pricing. The government announced on Wednesday that the minimum support prices (MSPs) for the Kharif marketing season (2022-23) will increase by an average of 6%, the greatest increase in the last three seasons. According to the analysis, the MSP's influence on 12 of the 14 crops covered by the scheme has been almost nil during the last three years. Crisil said that only paddy and cotton, out of the 14 crops covered by MSP, experienced meaningful procurement in the last three years, with 45 percent of paddy and 27 percent of cotton output procured at MSP, but barely 4-5 percent of groundnut production and even less for pulses. The large pricing disparity is owing to the government's announcement in fiscal 2019 that MSPs will be set at 50% over the all-India weighted average cost of production going forward. When evaluating MSPs, the agency says ...

Source: Krishi Jagran