Union Cabinet decides to hike MSP for Rabi crops for Marketing Season 2020-21

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New Delhi: The Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi has approved the increase in the Minimum Support Prices (MSPs) for all mandated Rabi Crops of 2019-20 to be marketed in Rabi Marketing Season (RMS) 2020-21.

Benefits and Major Impact:

The increase in MSP for Rabi Crops for RMS 2020-21 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 (CoP), which was announced in the Union Budget 2018-19.

This MSP policy whereby the farmers are assured of a minimum of 50 percent as margin of profit is one of the important and progressive steps towards doubling farmers’ income by 2022 and improving their welfare substantively.

For the Rabi crops of RMS 2020-21, the highest increase in MSP has been recommended for lentil (Rs. 325 per quintal) followed by safflower (Rs. 270 per quintal) and gram (Rs. 255 per quintal) which is a major step towards increasing the income of farmers.

The MSP of Rapeseed & Mustard has been increased by Rs. 225 per quintal. For both wheat and barley, the MSP has been increased by Rs. 85 per quintal. Wheat farmers will hence get a return over cost of 109 percent (refer table below).

Cost of production is one of the important factors in the determination of MSPs. This year’s increase in MSP of Rabi crops for RMS 2020-21 provides higher than 50 per cent return (except safflower) over all India weighted average cost of production. The return over all India weighted average cost of production is 109 per cent for wheat; 66 per cent for barley; 74 per cent for gram: 76 per cent for lentil; 90% for rapeseed & mustard and 50 per cent for safflower.

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