CENTRE ANNOUNCES HIKE IN MSP FOR PADDY – PULSES

CENTRE ANNOUNCES HIKE IN MSP FOR PADDY – PULSES

Subject : Economy

Context : The Central government has hiked the minimum support price (MSP) for common paddy to ₹1,940 a quintal for the coming kharif season, less than 4% higher than last year’s price of ₹1,868.

Concept :

Minimum support price

• MSP is the minimum price paid to the farmer for procuring food crops.
• It offers an assurance to farmers that their realisation for the agricultural produce will not fall below the stated price.
• The government uses the MSP as a market intervention tool to incentivise production of a specific food crop which is in short supply.
• It also protects farmers from any sharp fall in the market price of a commodity.
• MSPs are usually announced at the beginning of the sowing season and this helps farmers make informed decisions on the crops they must plant.
• MSP is computed on the basis of the recommendations made by the Commission for Agricultural Costs and Prices (CACP).
• It considers factors such as the cost of production, change in input prices, market price trends, demand and supply, and a reasonable margin for farmers.
• The Centre has increased the MSP of kharif crops for 2020-21 crop year in line with the principle of fixing MSPs at a level which is at 1.5 times the cost of production that was announced in Union Budget 2018-19.
• Concerted efforts were made over the last few years to realign the MSPs in favour of oilseeds, pulses and coarse cereals to encourage farmers shift to larger area under these crops and adopt best technologies and farm practices, to correct demand – supply imbalance.
• The added focus on nutri-rich nutri-cereals is to incentivize its production in the areas where rice-wheat cannot be grown without long term adverse implications for groundwater table.
• Crops covered under MSP: Paddy, Jowar, Bajra, Ragi, Maize, Tur, Moong, Urad, groundnut, sunflower seed, soyabean, nigerseed, Cotton and sesamum
• Besides, the Umbrella Scheme “Pradhan Mantri Annadata Aay Sanraks Han Abhiyan” (PM-AASHA) announced by the government in 2018 will aid in providing remunerative return to farmers for their produce.

The Umbrella Scheme consists of three sub-schemes i.e.

• Price Support Scheme (PSS)
• Price Deficiency Payment Scheme (PDPS)
• Private Procurement & Stockist Scheme (PPSS) on a pilot basis.