Industry And Cluster | News & Insights

Government hikes MSP on Karif cotton of 2019-20 season.

Published: July 5, 2019

Giving a major boost to the farmers’ income, the Cabinet Committee on Economic Affairs chaired by Prime Minister Narendra Modi has approved the increase in the Minimum Support Prices (MSPs) for all kharif crops, including cotton, for 2019-20 season. The move will lead to increased investment and production through assured remunerative prices to the farmers. The MSP for medium staple cotton has been raised by Rs. 105 per quintal to Rs. 5,255 per quintal. Likewise, the MSP for long staple cotton has been raised by Rs. 100 per quintal to Rs. 5,550 per quintal, according to an official statement. For medium staple cotton, the estimated cost of production is Rs. 3,501 per quintal, which includes all paid out costs such as those incurred on account of hired human labour, bullock labour/machine labour, rent paid for leased in land, expenses incurred on use of material inputs like seeds, fertilisers, manures, irrigation charges, depreciation on implements and farm buildings, interest on working capital, diesel/electricity for operation of pump sets, etc, miscellaneous expenses and imputed value of family labour.

The increase in MSP for Kharif crops for 2019-20 season is in line with the principle of fixing the MSPs at a level of at least 1.5 times of the all India weighted average cost of production (CoP), which was announced in the budget 2018-19. “This MSP policy whereby the farmers are assured of a minimum of 50 per cent as margin of profit is one of the important and progressive steps towards doubling farmers’ income by 2022 and improving their welfare substantively,” the statement said. The MSP mechanism provides a price guarantee to the farmers for their produce. This is implemented across the country as nearly 86 per cent farmers are in small and marginal category (Agriculture Census 2015-16), the system ensures equity. It also helps in stabilising prices in the market and thus services the consumers as well.

The government has shifted its focus production-centric approach to income-centric one, with the intention of giving enough policy thrust to income security of the farmers. Enhancing the coverage of Pradhan Mantri KisanSamman Nidhi (PM-KISAN) to all farmers in its first Union Cabinet meeting on May 31, 2019, is another major step in boosting the income of the farmers. The PM-KISAN yojana was announced in the interim Budget for the year 2019-20, where the small and marginal landholder farmer families with cultivable land holding up to 2 hectare across the country were assured of Rs. 6,000 per year.

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