Potential impact of guaranteeing a MSP across all crops in India
Guaranteeing a MSP across crops would support farm incomes and spur consumption demand,said CRISIL.
CRISIL is a Market Intelligence & Analytics said on Wednesday.
CRISIL estimating the “real cost” of such a guarantee at around ₹21,000 crore, based on Marketing Year (MY) 2023 trends.
While MSP-based procurement is done in only a few States, the firm said a guarantee will percolate its benefit to other regions.
CRISIL’s analysis focused on 16 of the 23 crops for whom MSPs are announced, which account for over 90% of India’s farm output.
Our calculations show it will need a working capital of around ₹6 lakh crore in Marketing Year (MY) 2023.
The real cost to the government, though, will be the difference between MSP and mandi prices,”
In MY 2023, when half the 16 crops traded above MSP and half below it, that would add up to ₹21,000 crore.
The cost could be higher if the government offloads the commodities in mandis because then prices could fall further than what was seen in those markets in 2022-23.
In kharif 2022 and rabi 2023, just 9% of mustard production was procured, and 3% of five other crops.
In this milieu, guaranteeing MSP for all crops can lead to farmers moving to crops other than paddy and wheat
COMMENTS