- Why in news
- On 30 September 2026, the Cabinet Committee on Economic Affairs approved higher MSPs for six mandated Rabi crops for Marketing Season 2027-28. Wheat MSP rises Rs 25 to Rs 2,610 per quintal.
- What it is
- Minimum Support Price is the price at which the government is ready to buy a crop from farmers, announced before sowing. It is approved by the CCEA on the recommendation of the Commission for Agricultural Costs and Prices (CACP). It acts as a price floor and a signal to farmers on what to grow.
- Approving body
- The CCEA, chaired by the Prime Minister, approved the MSP for Rabi crops for marketing season 2027-28.
- 1.5 times cost rule
- The rise follows the Union Budget 2018-19 promise of fixing MSP at least 1.5 times the all-India weighted average cost of production.
- Margins over cost
- Expected margin is highest for wheat (106%) and lowest for safflower (50%).
- CACP
- MSP is fixed on the recommendation of the CACP, which advises the government on prices of mandated crops.
Don’t confuse with MSP vs Fair and Remunerative Price (FRP): MSP applies to mandated crops like cereals, pulses and oilseeds. FRP is the minimum price mills must pay for sugarcane.
Don’t confuse with A2+FL vs C2 cost: A2+FL covers paid-out costs plus family labour. C2 adds the imputed rent and interest on owned land and capital. MSP is based on A2+FL.
Economy terms and data: 42 Prelims questions since 2013, rising in recent years; they test what a term or instrument means. In Mains, 12 news-triggered questions.
Why it matters
- Assured prices cut price risk and help farmers' incomes.
- Higher MSP for pulses and oilseeds nudges farmers away from wheat and rice, helping diversification and reducing import dependence.
Problems
- MSP procurement is concentrated in a few crops and states, so many farmers get little benefit.
- Wheat gets a Rs 25 rise on a 106% margin, which shows a skewed price structure; a high MSP can also distort cropping and strain the fiscal and stock position.
Way forward
- Widen procurement of pulses and oilseeds, and use price-deficiency payments, to make MSP effective beyond wheat and rice.
- Pair MSP with market reforms, better storage and crop diversification support.
Put in your answer
Wheat procurement: Wheat procurement rose to 3715 LMT in 2014-15 to 2025-26 from 2254 LMT in 2004-05 to 2013-14.
MSP payments to Rabi farmers: MSP amount paid for six Rabi crops rose to Rs 8.36 lakh crore in 2014-15 to 2025-26 from Rs 2.65 lakh crore in the earlier decade.
Crop diversification: Government promotes pulses and oilseeds by offering higher MSP for them.
- 2018Mains GS3 · Q3Define MSP and explain how it rescues farmers from low income trap
- 2017Mains GS3 · Q15Significance of MSP and crop insurance for small and marginal farmers
- 2026Mains GS3 · Q14Types of government agricultural supports, including MSP, and WTO Agreement on Agriculture issues
- 2009Prelims Q9Whether CACP recommends MSP for 32 crops; Consumer Affairs food security mission
- 2020Prelims Q69Whether MSP procurement is unlimited and whether market prices never exceed MSP
- 2023Prelims Q27Statements on MSP for niger seed, its kharif cultivation, and tribal oil use
UPSC’s own questions that come close to this issue, from our Prelims and Mains banks.
Prelims practice · Statement I and II
Ours, not from a UPSC paper
Consider the following statements about the Minimum Support Prices (MSP) for Rabi crops for Marketing Season 2027-28:
- Statement-I: Among the six mandated Rabi crops, safflower gets the highest absolute increase in MSP, while wheat gets the lowest.
- Statement-II: The expected margin over the all-India weighted average cost of production is lowest for wheat and highest for safflower.
Which one of the following is correct in respect of the above statements?
True or false?
1 of 5
Statements the way Prelims prints them. Say first, then see the fact.
1.The MSP for Rabi crops for 2027-28 was approved by the Cabinet Committee on Economic Affairs.
True. The CCEA approved the MSP.
2.The increase in MSP is in line with the Union Budget 2018-19 announcement of fixing MSP at least 1.5 times the all-India weighted average cost of production.
True. The 1.5 times cost principle was announced in Budget 2018-19.
3.The expected margin over cost of production is lowest for barley among the six Rabi crops.
False. Safflower has the lowest margin (50%); barley is 58%.
4.The cost of production used for MSP includes the imputed value of family labour.
True. The cost includes paid-out costs and imputed family labour.
5.MSP is recommended to the government by the Finance Commission.
False. The Commission for Agricultural Costs and Prices (CACP) recommends MSP.
Written by us from the release, not by UPSC; checked by a second model.
Mains practice
15 marks · 250 words
The Cabinet Committee on Economic Affairs has approved higher Minimum Support Prices for six Rabi crops for Marketing Season 2027-28, citing the Union Budget 2018-19 principle of fixing MSP at least 1.5 times the cost of production. Examine the objectives and provisions of the MSP system. Discuss the challenges in making it effective for farmers and promoting crop diversification, and suggest a way forward.
Worth revising until Prelims 2028: most news questions come within two years of the event.