Cabinet approves higher MSP, extension of interest subvention scheme for farmers

The cabinet backed a significant hike in the minimum support price (MSP) for pigeon pea, or tur, by ₹450 to ₹8,000 per quintal, alongside increases for other staples like paddy and moong. The decisions, which follow recent farmers' protests near the capital, also come ahead of a slew of assembly elections slated for this year and early next year.

Apart from paddy, the main kharif crop, others to get MSP hikes include moong, urad and cotton. The highest absolute increase was for nigerseed, followed by ragi (See chart). In terms of percentage increase, the biggest hike was for ragi and the lowest for moong. The increases range from 1% to 13.9%.

"MSP of all crops has been increased by ensuring that it is at least 1.5 times the average production cost across the country," Union agriculture minister Shivraj Singh Chouhan posted on X. "This decision is a big step towards making farmers empowered, prosperous and self-reliant and increasing their income," Chouhan said, crediting Prime Minister Narendra Modi for the MSP hike.

While the revision of MSP is an annual affair based on market prices, the latest increase comes ahead of elections later this year in Bihar, a key politically significant and agrarian state. Paddy, tur, moong and maize are among the major crops grown in the state, which prime minister Modi visits on Thursday and Friday. It would be his third visit to the state this year.

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MSP and farmer incomes have dominated debate and protests over the past few years, after the government introduced and then withdrew three farm laws to reform the agriculture sector. Till recently, farmers from Punjab and Haryana were protesting near the border with Delhi seeking legal guarantee of MSP on crops. In 2022, the Centre also formed a committee on minimum support price (MSP) headed by former agriculture secretary Sanjay Agrawal, which is yet to submit its report to the government.

The National Commission on Farmers chaired by M.S. Swaminathan has submitted five reports between December 2004 and October 2006, and recommended improvements in how MSP is implemented. He had also said MSP should be at least 50% more than the weighted average cost of production.

Sudhir Panwar, farm expert and ex-member of Uttar Pradesh Planning Commission said: "The hike in MSP of most cultivated paddy crop is only 3%, which is lower than inflation and the hike in input cost. The MSP increase of other crops is of only for symbolic value without purchase arrangement."

An official statement said the increase is in line with the FY19 budget announcement of fixing MSP at a level of at least 1.5 times the national weighted average cost of production. The expected margins to farmers over their cost of production are estimated to be highest in case of bajra (63%) followed by maize (59%), tur (59%) and urad (53%). For the rest, margin to farmers over their cost of production is estimated to be at 50%, it said.

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The Indian Vegetable Oil Producers’ Association (IVPA) welcomed the decision to increase MSP for oilseeds. "This is a timely and progressive step aligned with the national priority of enhancing oilseed production and reducing India’s dependency on imports," said Sudhakar Desai, president, IVPA. At the same time, the organization urged the government to consider extending procurement interventions beyond mustard to other major oilseeds. Such measures will provide price stability and support farmers across the oilseed spectrum, according to Desai.

In another decision for agriculture, the cabinet approved continuing interest subvention under the Modified Interest Subvention Scheme (MISS) for the FY26. MISS is a scheme aimed at ensuring the availability of affordable short-term credit to farmers through Kisan Credit cards (KCC), wherein farmers receive short-term loans of up to ₹3 lakh at a subsidized rate of 7%, with 1.5% interest subvention provided to eligible lending institutions.

Among other decisions, the Cabinet Committee on Economic Affairs also approved the construction of four-lane Badvel-Nellore rail corridor with a length of 108 km at a cost of ₹3653.10 crore in Andhra Pradesh on NH 67. It will provide connectivity to important nodes in the three industrial corridors of Andhra Pradesh. The corridor starts from Gopavaram Village on the existing National Highway NH-67 in the YSR Kadapa District and terminates at the Krishnapatnam Port Junction on NH-16 (Chennai-Kolkata) in SPSR Nellore District of Andhra Pradesh.

The cabinet also approved two multi-tracking projects across Indian Railways—Ratlam-Nagda 3rd and 4th line and Wardha-Balharshah 4th line—at an estimated cost of ₹3,399 crore. Both are expected to be completed up by 2029-30.

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With the fresh approval of infrastructure projects involving railways and highways sectors, government has so far cleared projects worth ₹4.5 trillion for providing efficient transport system and reduce logistics cost.