According to Motilal Oswal Financial Services, the rate will remain at 4.1 per cent YoY in FY22

The government has recently approved an increase in the Minimum Support Price (MSP) for all 14 mandated Kharif crops for marketing season FY22. 

According to Ecoscope: The Economy Observer report and Motilal Oswal Financial Services, the production-weighted average MSP hike of all these 14 crops stood at 4.1 per cent YoY in FY22, similar to FY21, but higher than the 3 per cent YoY in FY20. 

“The expected returns to farmers over their cost of production is estimated to be highest in the case of bajra (85 per cent), followed by urad (65 per cent) and tur (62 per cent). For the rest of the crops, return to farmers over their cost of production is estimated to be at least 50 per cent,” a government release said.

The government calculates cost as a function of the cost of cultivation, plus the value of family labour. The highest absolute increase in MSP in FY22 over FY21 has been recommended for sesamum (Rs 452/quintal), followed by tur and urad (Rs300/quintal each).

The Cabinet has approved an increase in the MSP of paddy (common variety) to Rs 1,940 per quintal for the 2021-22 crop year (July-June) from Rs 1,868 per quintal in the year-ago period. 

Similarly, the MSP of Bajra has been increased to Rs 2,250 per quintal for the current year from Rs 2,150 per quintal last year.