What do you mean by Minimum Support Price (MSP)? How will MSP rescue the farmers from the low income trap?

Minimum Support Price (MSP) is the guaranteed price at which the government commits to procure notified crops from farmers, insulating them from a sharp fall in market prices. It is announced before each sowing season for around 23 crops on the recommendation of the Commission for Agricultural Costs and Prices (CACP).

How MSP can rescue farmers

• It sets a price floor, protecting farmers from distress sales when market prices crash.
• It assures remunerative returns; the government has adopted a formula of at least 1.5 times the cost of production, echoing the Swaminathan Committee.
• It provides income stability that encourages investment and the right cropping choices.

Limits of the mechanism

The income-rescue is partial. Effective procurement is concentrated in wheat and paddy and in a few states, so most farmers sell below MSP. Awareness, mandi access, storage and coverage of crops and regions remain weak.

Universalising procurement, deficiency-price payments (as in some state schemes) and strong market linkages are needed for MSP to genuinely lift farmers out of the low-income trap.