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Govt Hikes Minimum Support Price for Rabi crops

Govt Hikes MSP for Rabi crops

MSP Raised for Rabi Crops

  • The Cabinet Committee on Economic Affairs has marginally increased the Minimum Support Price (MSP) of six rabi crops for 2021-22.
  • 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). 

Commission for Agricultural Costs and Prices (CACP) :

    • Commission for Agricultural Costs and Prices is a decentralised agency of the Government of India. It was established in 1965 as the Agricultural Prices Commission and was given its present name in 1985. It is an attached office of the Ministry of Agriculture & Farmers Welfare, Government of India.
    • The CACP is a statutory body and submits separate reports recommending prices for Kharif and Rabi seasons.

Important details :

    • The increase in MSP for Rabi Crops for marketing season 2021-22 is in line with 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.
    • This increase in MSP is in line with the recommendations of Swaminathan Commission.

National Commission on Farmers: Swaminathan Committee:

    • Constituted in 2004 by the Union government with MS Swaminathan as its chairman
    • Aim :  To make farm commodities cost-competitive and more profitable.
    •  Recommended that MSPs must be at least 50% more than the cost of production and recommended the C2 method for MSP calculation.
    • However, the government calculates its MSP based on the A2+FL method.
      • MSP is usually estimated based on three types of calculation methods.
        • A2: Under this, MSP is set 50% higher than the amount farmers spend on farming including spending on seeds, fertilisers, pesticides, and labour.
        • A2+FL: It includes A2 plus an assigned value of unpaid family labour.
        • C2: Under C2, the estimated land rent and the cost of interest on the money taken for farming are added on top of A2+FL.