W Power 2024

Government hikes MSP of crops by 5-10%

Union Minister Piyush Goyal said the hike in the minimum support price of kharif crops for FY24 is the highest-ever increase announced by the government

Neha Bothra
Published: Jun 7, 2023 05:47:33 PM IST
Updated: Jun 7, 2023 06:47:04 PM IST

Government hikes MSP of crops by 5-10%For most crops, the margin to farmers is likely to be at least 50 percent. Image: T. Narayan/Bloomberg via Getty Image

The government increased the Minimum Support Price (MSP) of all kharif crops by 5-10 percent. The increase for urad dal is the lowest at 5.3 percent while moong and cotton are around 10 percent. This increase in the MSP for FY24 is in line with the government’s aim of providing fair remuneration for farmers. MSP is the price at which the government procures grains from farmers.

According to economists, the expected margin to farmers would be highest for bajra at 82 percent, tur at 58 percent, and soyabean at 52 percent. For most crops, the margin to farmers is likely to be at least 50 percent. This spells good news for the rural economy, which has been a sore point in recent quarters. However, this will add to benchmark market prices at a time when inflation is already high.

Madan Sabnavis, chief economist, Bank of Baroda says, "The increases are definitely quite aggressive and much higher than the 4-6 percent expected as has been in the past. This means that in case of any shortfall in production of any crop, prices can increase at a faster rate and add to inflation. The crux will hence be the size of the crops this season. This is important because the major risk to inflation is food prices and the Reserve Bank of India (RBI)will be cautious until there is more clarity on kharif prospects. This set of MSPs will hence be another factor that would be considered when taking a call on rates on June 8 which will be a pause for sure, which will get prolonged on account of this announcement."

Sabnavis explains that jowar, bajra, and maize have seen inflation of 13-15 percent and in case of a crop failure in any region of the country can stoke the possibility of higher prices of these crops. The government is likely to procure stocks of tur dal at a time when market prices have been increasing. Union Minister Piyush Goyal said the hike in MSP of crops for FY24 is the highest-ever increase announced by the Cabinet.

Hike in MSP

Rs/qtl except for cotton

Products FY23 FY24 Increase %
Paddy-Grade A^ 2,060 2,203 6.9
Jowar-Hybrid 2,970 3,180 7.1
Jowar-Maldandi^ 2,990 3,225 7.9
Bajra 2,350 2,500 6.4
Ragi 3,578 3,846 7.5
Maize 1,962 2,090 6.5
Tur/Arhar 6,600 7,000 6.1
Moong 7,755 8,558 10.4
Urad 6,600 6,950 5.3
Groundnut 5,850 6,377 9.0
Sunflower Seed 6,400 6,760 5.6
Soybean (Yellow) 4,300 4,600 7.0
Sesamum 7,830 8,635 10.3
Nigerseed 7,287 7,734 6.1
Cotton (Medium Staple) 6,080 6,620 8.9
Cotton (Long Staple) ^ 6,380 7,020 10.0

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