Minimum Support Price

The Minimum Support Price (MSP) is a type of market intervention used by the Indian government to protect agricultural producers against a significant drop in farm prices.

The Government of India announces minimum support prices based on the recommendations of the Commission on Agricultural Costs and Prices (CACP).

Determination of MSP

(i) Three kinds of Cost Production: The CACP projects three kinds of production cost for every crop, both at state and all-India average levels.

  • ‘A2’: Covers all paid-out costs directly incurred by the farmer in cash and kind on seeds, fertilisers, pesticides, hired labour, leased-in land, fuel, irrigation, etc.
  • ‘A2+FL’: Includes A2 ....
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Indian Economy