India: Revised MSPs is 47% lower for majority of the 14 crops
Cotton Seed
Other Pea & Pulse
Published Jun 12, 2022
Tridge summary
According to a Crisil analysis, the MSP is inefficient because of the low intake and large price discrepancies between support and market pricing.
Original content
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 three factors must be considered: the increase in production costs, the level of crop procurement at MSP, and crop traded prices. The scheme, ...
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