The Indian government has announced a significant increase in the Minimum Support Price (MSP) for wheat and other rabi crops for the 2024-25 marketing season. This decision, taken ahead of assembly polls in major wheat-growing states, marks the highest quantum of increase in MSP since the Modi government came to power in 2014.
- Increase in Wheat MSP: The MSP for wheat has been raised by ₹150, from ₹2,125 per quintal in the 2023-24 season to ₹2,275 per quintal for the 2024-25 season. This increase is the largest since the 2015-16 season and comes in the context of pressure on consumer prices of wheat and wheat flour over the last one-and-half years.
- Other Rabi Crops MSP Hike: The MSP for five other rabi crops — gram, barley, lentil (masur), rapeseed-mustard seed, and safflower — have also been hiked. The highest increase among these is for lentil (masur), raised by ₹425 per quintal, followed by rapeseed-mustard seed with an increase of ₹200 per quintal. The MSP for barley has been increased by ₹115 per quintal, for gram by ₹105 per quintal, and for safflower by ₹150 per quintal.
- Policy Context: This increase aligns with the Union Budget 2018-19 announcement to fix MSP at a level of at least 1.5 times the all-India weighted average cost of production. The expected margin over this average cost of production is 102% for wheat, indicating a significant buffer for wheat producers.
- Government Initiatives and Food Security: In recent years, the government has focused on promoting crop diversification towards oilseeds, pulses, and millets to enhance food security, increase farmers’ income, and reduce dependence on imports. Initiatives like the National Food Security Mission (NFSM), Pradhan Mantri Krishi Sinchayee Yojana (PMKSY), and the National Mission on Oilseeds and Oil Palm (NMOOP) have been undertaken to support this shift.
- Wheat Production Targets and Trends: The Agriculture Ministry has set a record wheat production target of 114 million tonnes for the 2023-24 crop year, higher than the actual output of 112.6 million tonnes achieved in 2022-23. The availability of wheat seed is also reported to be sufficient for the upcoming rabi season, with about 123.43 lakh quintal available compared to the requirement of 102.63 lakh quintal.
- MSP Calculation and Swaminathan Commission Recommendations: The government’s method of calculating MSP is based on the A2+50% formula, which considers the actual cost of farming (A2) plus a 50% margin. This formula deviates from the Swaminathan Commission’s recommendation of C2+50%, which includes a more comprehensive calculation of costs, including land rentals or interest on invested capital.
- Overall Food Grain Production: For the fiscal year 2022-23, India experienced a 4.4% rise in food grain production, setting a record high of 3,296.87 lakh tonnes. Rice and wheat, major contributors to India’s granary, registered significant increases despite challenging weather conditions. Wheat production for 2022-23 was estimated at 1,105.54 lakh tonnes, surpassing both the previous year’s output and the five-year average.
This MSP increase reflects the government’s commitment to ensuring fair compensation for farmers and promoting agricultural sustainability in the face of changing market dynamics and climatic challenges. The decision is expected to have a wide-ranging impact on the agricultural sector, consumer prices, and the overall economy.