Union government has approved an increase in the Minimum Support Prices (MSPs) of 14 Kharif crops to help farmers in the time of Covid-19 crisis. The increased price would ensure 50-83% on cost to farmers.
The government is also promoting sustainable agriculture with diversified cropping patterns and encouraging farmers to grow oilseed to reduce import bills and to meet up the demand. The government is aiming to achieve higher productivity without jeopardizing the nation’s biodiversity. Besides MSP, the government announced subsidies and extension of repayment date for short-term loans.
Further to increase the scope of small scale enterprises in the Aatmanirbhar Bharat package, the government has altered the definition of the MSME (Micro, Small, and Medium Enterprises) sector.
The turnover limit for medium enterprises has been revised upward to ₹250 crores from ₹100 crores; the investment limit for medium enterprises has been revised upwards to ₹50 crores from ₹20 crores.
Minimum Support Price (MSP)
MSP is the market intervention by the Government to insure agricultural producers against any sharp fall in farm price. MSP ensures minimum price for crops of farmers and helps calculate income of the agriculture sector. It was announced by the government in 1966-67 during the Green revolution for Wheat. MSP was introduced with the aim of providing financial stability to the agricultural system and encourage production. As of now 22 Rabi and Kharif crops are under MSP.
Issues Around MSP
- MSPs have unequal access: Benefits don’t reach all farmers and for all crops
- Effects of Inflation: Increase in production cost and decreasing value of money make MSPs ineffective
- Storage Problems: Procurement without sufficient storage has resulted in huge piling of stocks in the warehouses, resulting in rotting of grains
- No long term benefits: Hiking MSP without investing in infrastructure just a short-term play
- Nationwide single price policy: Actual cost of production varies from place to place