The Indian government fixes a Minimum Support Price or MSP for 22 crops - paddy, wheat, several pulses, oilseeds and millets are a part of this list. The objective of declaring MSP is to help farmers get a good price for their produce and to procure food grains for public distribution. However, recent data shows that the cost of production is rising.  

A recent report by Infomerics Ratings notes that the value of MSP for paddy has increased over time, reflecting the rising overall cost of production. However, it also notes that the input costs have also increased drastically. 

It also notes that there are significant disparities between States when it comes to production and procurement. This has a big impact on farmer incomes. There is also an increasing demand for a legally binding MSP.  

In fact, the Standing Committee on Agriculture, Animal Husbandry and Food Processing in its report on 'Demands for Grants (2024-25)' of the Ministry of Agriculture and Farmers Welfare on the 17th December 2024, noted that the implementation of MSP is a focal point in the dialogue surrounding agricultural reform and farmers welfare in India.  

It goes on to note that, "Since the Committee believe that implementing a robust and legally binding MSP in the country could play a crucial role in reducing farmer suicides in India by providing financial stability, protecting against market volatility & alleviating debt burdens, they recommended implementation of the same." 

We speak to Dr. Manoranjan Sharma, Chief Economist at Infomerics Ratings, about rice production in the country, how MSP is calculated, and about the health of the rural economy. 

Guest: Dr. Manoranjan Sharma, Chief Economist at Infomerics Ratings 

Host: Nivedita V 

Edited by Sharmada Venkatasubramanian