Ministries flagged MSP concerns: Low returns to rising oil imports

• The Cabinet approved an increase in MSP for rabi crops for the marketing season 2024-25 on October 18, 2023.
• RTI documents reveal concerns raised by various Union ministries regarding the impact of high MSP on crop diversification.

Concern 1: Import Dependence

• The Department of Food & Public Distribution emphasises that the MSP for oilseeds has not led to desired domestic production increase.
• Despite estimates of increased oilseed production, India still relies on imports for 55% of its edible oil needs.
• The department suggests a long-term MSP policy and higher MSP for oilseeds to incentivize production and shift to high-yielding varieties.

Concern 2: Unequal Benefits

• The Department of Expenditure highlights the skew in favor of wheat procurement, benefiting only a limited number of states.
• NITI Aayog suggests complying with 14 non-price recommendations to enhance oilseed and pulse productivity.

Concern 3: WTO Obligations

• The Department of Commerce cautions about India's WTO commitments, particularly the 'de-minimis' subsidy limit.
• India's breach of the de-minimis subsidy limit for rice and emphasizes the need for predetermined targets for MSP-based crop procurement.

Prelims Takeaway

• WTO
• MSP