Indian farmers require revenue, not price subsidies

• The Indian government has increased the minimum support price (MSP) for the 2025-26 wheat crop by Rs 160, raising it to Rs 2,585 per quintal, which is economically questionable given high public wheat stocks.

• Current wheat stocks are at 33.3 million tonnes, the highest in four years, and the good 2024-25 crop indicates expected bumper yields next season.

• The MSP increase lacks a basis in production costs; the projected average “A2+FL” cost for wheat is Rs 1,239 per quintal, making the new MSP 109% higher than this estimated cost, well over the minimum required margin.

• Other rabi season crop MSPs are set significantly lower than that of wheat, indicating a preferential bias towards wheat farmers over those growing pulses or oilseeds.

• The MSP policy shows discrepancies in procurement and import duties, with wheat and rice subjected to higher duties than pulses and oils.

• The latest wheat MSP is misaligned with international market prices, which are between $225-230 per tonne, compared to the Indian MSP conversion of over $290 per tonne.

• Farmers need income rather than price support; direct per-hectare income transfers are suggested as a better approach, allowing farmers to grow market-desired crops.

Revenue support over subsidies is important topic for Civil service exam (WBCS).

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