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Average MSP increase in rabi crops hits 6-year low at 4.3%

Wheat's MSP increased Rs 50 per quintal, a 2.6 per cent rise than the previous year and the lowest among all crops

twitter-logoNiti Kiran | September 22, 2020 | Updated 21:48 IST
Average MSP increase in rabi crops hits 6-year low at 4.3%
The highest increase in MSP has happened for lentil

The Cabinet Committee on Economic Affairs approved the increase in the minimum support prices (MSPs) for all mandated rabi crops for marketing season 2021/22. The average increase in rabi MSP is 4.3 per cent which is the lowest in past six years and lesser than the average 5.7 per cent increase announced last year, highlights a CARE Ratings report.

This hike in MSP is in line with the recommendations of Swaminathan Commission and the principle of fixing the MSPs at a level of at least 1.5 times of the all-India weighted average cost of production as announced in Union Budget 2018/19.

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The highest increase (6.3 per cent year-on-year at Rs 300 per quintal) in MSP has happened for lentil, followed by gram and rapeseed & mustard, which saw an increase of 5.1 per cent. For wheat, the MSP has been increased by Rs 50 per quintal, a 2.6 per cent rise than the previous year and the lowest among all crops.

Since 2013-14, the MSP for wheat has increased at a compounded annual growth rate of 5 per cent while for the marketing season 2021/22, it rose 2.6 per cent. The increase for barley and rapeseed and mustard has been around 6 per cent per annum between FY14 and FY21.  The per annum growth in the MSP of gram (chana) has been 7.4 per cent while that of lentil and safflower has been more than 8 per cent during the last eight years, the report added.

The average return over cost is around 78 per cent for all six rabi crops, which is more than what was recommended by the Swaminathan Committee. The expected returns to farmers over their cost of production are estimated to be highest in case of Wheat (106 per cent) followed by rapeseed & mustard (93 per cent), gram and lentil (78 per cent).  For barley, return to farmers over their cost of production is estimated at 65 per cent and for safflower, 50 per cent.

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