Reading the Hike

(Source: Editorial Page, The Indian Express)

Topic: GS3: Agriculture, MSP Policy, Food Security, Climate-Resilient Farming

Context

With the southwest monsoon arriving early in 2025, the Government of India has announced the Minimum Support Prices (MSPs) for kharif crops in advance, giving farmers a timely price signal before the sowing season begins. The editorial examines the rationale, implications, and direction of this move, especially in light of India’s chronic paddy overproduction and growing need for crop diversification.

Early and Strategic Announcement

• This year’s MSPs were declared in May, a month earlier than in 2024, and ahead of the monsoon’s onset. This is a welcome administrative move, allowing farmers to make informed cropping decisions and plan better based on expected returns

Modest Hike in Paddy MSP

• Paddy MSP raised by ₹69/quintal, the smallest increase in five years, compared to ₹117 and ₹143 in the last two years.

• India has excess paddy stock, holding over 63 million tonnes, which is 4.6 times the buffer norm, even after record exports.

• The low hike in paddy’s MSP is a calibrated policy decision to discourage excessive rice cultivation and reduce strain on water resources.

Environmental Concerns with Paddy Cultivation

• Paddy is highly water-intensive, consuming around 4,000–5,000 litres of water per kg of rice.

• Concentrated cultivation in Punjab and Haryana has depleted aquifers, worsened air pollution through stubble burning, and degraded soil health.

• Continued incentivization of paddy undermines India’s commitment to climate-resilient agriculture and the sustainable development goals (SDGs).

Aggressive Hikes in Pulses and Oilseeds

• Government raised MSPs for:

Crop	MSP 2024–25 (₹/quintal)	MSP 2025–26 (₹/quintal)	Absolute Increase (₹)	% Increase
Paddy (Common)	2,183	2,252	69	3.2%
Arhar (Tur)	7,000	7,315	315	4.5%
Urad	6,600	6,950	350	5.3%
Soybean	4,600	5,200	600	13%
Groundnut	6,300	6,930	630	10%
Cotton (Medium Staple)	6,620	7,450	830	12.5%
Maize	2,090	2,290	200	9.6%

 

• This signals a deliberate shift towards promoting nutritionally rich, less water-intensive, and import-substituting crops.

• India still imports large quantities of edible oils and pulses. These hikes can help reduce import dependence, improve dietary diversity, and raise farm incomes in dryland regions.

Economic and Fiscal Prudence

• With rising fiscal pressures and inflationary concerns, the modest paddy hike reflects an effort to balance farm support with macroeconomic stability.

• Paddy procurement already accounts for a significant portion of the food subsidy bill, estimated at ₹3.75 lakh crore in 2024–25.

• A restrained approach in MSP allocation helps manage public procurement burdens and reduce excessive food stockpile costs.

The Limitations of the Current MSP Framework

• MSP coverage remains uneven—while cereals like rice and wheat have assured procurement, most pulses, oilseeds, and millets lack effective procurement mechanisms.

• Without robust procurement and market assurance, MSP alone may not influence farmer choices, especially in rainfed and tribal regions.

• There’s also concern that political considerations influence MSP decisions, leading to distorted incentives and input inefficiencies.

Also Read: The Indian Express Editorial 30 May 2025

Way Forward:

• The MSP regime must evolve beyond political populism to align with climate adaptation, water security, and market demand.

• Long-term reforms could include:

  • Direct Benefit Transfers (DBT) to farmers instead of input-linked subsidies.

  • Encouraging crop insurance, contract farming, and market reforms under e-NAM.

  • Strengthening procurement systems for non-cereal crops to make diversification viable.

Practice Question: “Discuss the rationale behind the recent Minimum Support Price hikes for kharif crops in India. How can MSP reforms promote sustainable agriculture and reduce environmental stress?” (GS3, 250 words, 15 marks)