Cabinet approves hike in Rabi minimum support prices for 2027-28 season

Agriculture & Economic Policy · 1 October 2026 · Based on The Hindu (original report)

2-minute summary

The Union Cabinet, through the Cabinet Committee on Economic Affairs (CCEA), has approved the Minimum Support Prices (MSP) for all mandated Rabi crops for the 2027-28 marketing season. The government highlighted that the announced MSPs ensure a profit margin ranging from 50% to 106% over the all-India weighted average cost of production, fulfilling the formula announced in the Union Budget 2018-19. Safflower received the highest percentage increase at 10.3% (reaching ₹7,215 per quintal), followed by rapeseed and mustard at 6.7%. Wheat MSP was raised by 1% to ₹2,610 per quintal. Additionally, the government highlighted that procurement volumes and total MSP payouts for wheat and Rabi crops have expanded significantly across 2014-25 compared to previous decades, aiming to provide remunerative returns and incentivize crop diversification away from water-intensive paddy.

Why it's in the news

The Union Cabinet approved the hike in Minimum Support Prices (MSP) for all mandated Rabi crops for the 2027-28 marketing season, sparking discussions on farm income security and crop diversification.

Facts to remember

• The Cabinet Committee on Economic Affairs (CCEA) approves Minimum Support Prices (MSP) for mandated crops.
• Safflower received the highest MSP hike of 10.3% to ₹7,215 per quintal for the 2027-28 Rabi season.
• The MSP for wheat was increased by 1% to ₹2,610 per quintal for the 2027-28 marketing year.
• The Union Budget 2018-19 announced fixing MSP at least 1.5 times the all-India weighted average cost of production.
• Rapeseed and mustard MSP was increased by 6.7% to ₹6,613 per quintal.
• The expected margin over the cost of production for wheat is 106% for the 2027-28 season.

Background and context

Minimum Support Price (MSP) is a form of market intervention by the Government of India to insure agricultural producers against any sharp fall in farm prices. The CCEA announces MSPs for 22 mandated crops (14 Kharif, 6 Rabi, and 2 commercial crops) and fair and remunerative prices (FRP) for sugarcane based on recommendations from the Commission for Agricultural Costs and Prices (CACP). Over the years, the debate surrounding MSP has shifted from mere procurement support to legal backing demands, fiscal sustainability of open-ended procurement, and its impact on ground-level crop diversification, particularly away from paddy and wheat in northwestern India.

Committees and reports

• Commission for Agricultural Costs and Prices (CACP) Recommendations — Statutory body advising the government on pricing policies for agricultural commodities.

Government schemes

• Minimum Support Price (MSP) Regime — Provides price assurance and food security procurement mechanism.

Previous UPSC questions on this theme

• Mains GS-3 2017 — How do subsidies affect the cropping pattern, crop diversity and economy of farmers? What is the significance of crop insurance, minimum support price and food processing for small and marginal farmers?
• Prelims GS-1 2023 — Consider the following statements : 1. The Government of India provides Minimum Support Price for niger (Guizotia abyssinica) seeds. 2. Niger is cultivated as a Kharif crop. 3. Some tribal people in India use niger seed oil for cooking. How many of the above statements are correct? (a) Only one (b) Only two (c) All three (d) None

Mains practice: Examine the efficacy of the Minimum Support Price (MSP) mechanism in incentivizing crop diversification and ensuring remunerative returns to farmers.

Introduction:

The Minimum Support Price (MSP) acts as a crucial safety net for Indian farmers, designed to protect them from market volatility and ensure food security through public procurement.

Body:

• Ensuring Remunerative Returns: Recent revisions aim to provide a margin of at least 50% over the cost of production, fulfilling long-standing policy commitments and supporting farm incomes.

• Impact on Crop Diversification: While staples like wheat and paddy enjoy assured procurement, coarse grains, pulses, and oilseeds (e.g., safflower, mustard) often lack robust procurement infrastructure, hindering true diversification.

• Regional Disparities: Effective MSP benefits remain skewed toward surplus states and specific crops, leaving small and marginal farmers in non-procurement regions vulnerable.

• Fiscal and Ecological Pressures: Open-ended procurement of water-intensive crops strains state finances and depletes groundwater tables, particularly in northwestern states.

Conclusion:

While MSP remains indispensable for price stability, reforms must focus on expanding decentralized procurement for nutri-cereals and oilseeds, promoting storage infrastructure, and integrating direct benefit transfers to genuinely foster sustainable agricultural diversification.

Prelims practice questions

Q1. Consider the following statements regarding the Minimum Support Prices (MSP) in India: 1. The MSP is recommended by the Commission for Agricultural Costs and Prices (CACP). 2. The Cabinet Committee on Economic Affairs (CCEA) chaired by the Prime Minister takes the final decision on fixing MSPs. Which of the statements given above is/are correct?

1. 1 only
2. 2 only
3. Both 1 and 2
4. Neither 1 nor 2

Answer: C. Both statements are correct. The CACP recommends MSPs for mandated crops, and the CCEA makes the final official announcement and approval.

Q2. Which of the following crops received the highest percentage increase in MSP for the 2027-28 Rabi season as per government announcements?

1. Wheat
2. Safflower
3. Barley
4. Rapeseed and mustard

Answer: B. Safflower received the highest percentage hike of 10.3% to reach ₹7,215 per quintal for the 2027-28 Rabi season.

Q3. Consider the following crops: 1. Wheat 2. Barley 3. Safflower 4. Groundnut How many of the above are mandated Rabi crops for which MSP is announced?

1. Only two
2. Only three
3. Only one
4. All four

Answer: B. Wheat, barley, and safflower are mandated Rabi crops. Groundnut is a Kharif crop, not a Rabi crop. Therefore, three of the four are Rabi crops.

Revision flashcards

• Which body approves the Minimum Support Prices (MSP) in India? Cabinet Committee on Economic Affairs (CCEA)
• Which statutory body recommends the MSP rates to the government? Commission for Agricultural Costs and Prices (CACP)
• Which Rabi crop received the highest percentage MSP hike for the 2027-28 season? Safflower (10.3% increase)
• What formula was adopted in the Union Budget 2018-19 regarding MSP cost coverage? Fixing MSP at a level of at least 1.5 times (150%) of the all-India weighted average cost of production.
• How many total crops are currently covered under the official MSP announcement regime (as of October 2026)? 22 mandated crops plus Fair and Remunerative Prices (FRP) for sugarcane.