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News Excerpt: 

Union Cabinet approves 5.35% MSP hike for paddy to ₹2,300/quintal; also clears Varanasi airport expansion, new Maharashtra port, wind energy projects in Gujarat and T.N., and forensic infrastructure development.

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• The Cabinet approved minimum support price (MSP) hikes for all 14 kharif season crops, following the policy of keeping MSPs at least 1.5 times above the cost of production.
• The cost of production for computation of MSP includes all paid-out costs directly incurred by the farmer in cash and kind on seeds, fertilisers, pesticides, hired labour, leased-in land, fuel and irrigation and an imputed value of unpaid family labour.
• In 2018-19, the government adopted the policy of MSPs to ensure at least 50% profits over computed cost of production of crops. 
• In that year, MSP hikes for kharif crops were highest in the range of 4.1-28.1%.
• Only four crops – bajra (77%), arhar dal (59%), maize (54%), and black gram (52%)  have MSPs providing farmers with a margin of more than 50% above their production costs.
• Paddy, the key kharif crop, received an MSP increase of ₹117 per quintal, allowing farmers a margin of exactly 50%.
• Kharif sowing usually begins in June with the onset of the southwest monsoon, while the crop marketing season will run from October 2024 to September 2025.
• The hike comes even though the government already holds a record stockpile of rice, more than four times the required buffer.

Implications and Objectives:

• The higher MSPs for pulses and oilseeds will drive the gross value added (GVA) in "agriculture and allied services" in the second half of the current year, as procurement begins in October.
• Elevated MSPs, backed by procurement, could potentially boost rural income and purchasing power.
• This year's MSP hike is likely to result in a total financial implication of ₹2 lakh crore, about ₹35,000 crore higher than the previous season.
• The government is aiming to give a signal to farmers to diversify to more remunerative pulses and oilseeds.
• The highest absolute increases were recommended for oilseeds and pulses, with niger seed seeing an increase of ₹983 per quintal, followed by sesamum (₹632 per quintal), and arhar dal (₹550 per quintal).
• In the oilseed category, the MSPs for groundnut, sunflower seeds, soybean, sesamum, and niger seed were increased.
• To reduce dependence on pulse imports, the government increased the MSP for arhar dal to ₹7,550 per quintal, green gram beans (moong) to ₹8,682, and black gram to ₹7,400.
• India imports about 56% of its total domestic requirement of edible oil while 15% of pulses consumption is met through imports.
• The MSPs for cotton (medium staple) and cotton (long staple) were also increased.

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