The Government of India continues to strengthen farmer welfare by maintaining a cost-reflective framework for Minimum Support Prices (MSPs) across 22 mandated agricultural crops, including 14 kharif crops. The MSPs are announced annually for the entire country based on recommendations from the Commission for Agricultural Costs & Prices (CACP), after extensive consultation with State Governments and relevant Central Ministries.
While formulating MSPs, the CACP takes into account several critical factors such as cost of production, demand-supply balance, domestic and global market prices, inter-crop price parity, terms of trade between agriculture and non-agriculture sectors, and the impact on the overall economy. The objective is to ensure fair and remunerative returns to farmers while promoting efficient use of resources like land and water.
A landmark decision in this direction was taken in the Union Budget 2018-19, when the Government announced a pre-determined principle of fixing MSPs at least 1.5 times the cost of production. Since then, the MSPs of all mandated kharif, rabi, and commercial crops have been revised upward to guarantee farmers a minimum return of 50 percent over the all-India weighted average cost of production.
This policy framework has reinforced the safety net for millions of farmers, providing them with assured prices and reducing market risks. By aligning support prices with production costs, the Government aims to enhance farm income, ensure agricultural sustainability, and promote food security in the country.
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