MSP hike for 14 Kharif crops for MY 2026-27: sunflower +₹622, cotton +₹557, paddy ₹2,441/qt; total payout ₹2.6 lakh crore
Why in News
On 13 May 2026, the Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, approved an increase in the Minimum Support Prices (MSPs) for 14 Kharif crops for the marketing season 2026-27. The largest absolute hikes — driven by the A2+FL+50% margin formula the government has used since 2018-19 — were announced for sunflower seed (+₹622/quintal), cotton (+₹557), nigerseed (+₹515) and sesamum (+₹500). Common-grade paddy was fixed at ₹2,441/quintal (up ₹72 from ₹2,369), Grade-A paddy at ₹2,461, maize at ₹2,410, bajra at ₹2,900 and ragi at ₹5,205. The total outlay on procurement is estimated at ₹2.6 lakh crore. The announcement comes against the backdrop of the April 2026 WPI print of 8.3% — a 42-month / 3.5-year high — driven by fuel & power inflation of 24.71% and crude petroleum & natural gas inflation of 67.18%, both spillovers from the West Asia conflict and the Strait of Hormuz blockade scare. The CCEA's decision is therefore both a producer-support measure (insulating farmers from cost-push from diesel and fertiliser) and a political signalling exercise ahead of the Kharif sowing window. The MSP architecture rests on the Commission for Agricultural Costs and Prices (CACP) — a Ministry of Agriculture body that recommends price-policy reports five times a year (Kharif, Rabi, sugarcane, raw jute, copra) — with the CCEA taking the final call. Critically, MSP has no statutory backing in India; it is a policy instrument enforced through procurement by FCI and state agencies.
At a Glance
- Date of CCEA approval
- 13 May 2026.
- Coverage
- 14 Kharif crops for MY 2026-27.
- Top hike
- sunflower seed +₹622/qt; cotton +₹557/qt.
- Paddy common
- ₹2,441/qt; Grade-A: ₹2,461/qt.
- Estimated payout
- ~₹2.6 lakh crore.
- Methodology
- A2+FL plus 50% margin (Swaminathan-light formula since 2018-19).
- Recommending body
- CACP; deciding body: CCEA.
- Companion data
- WPI inflation 8.3% in April 2026 — 3.5-year high.
MSP — definition, scope and legal status
Minimum Support Price (MSP) is the price at which the Government of India procures crops directly from farmers to insure them against any sharp fall in farm prices. Recommending body: the Commission for Agricultural Costs and Prices (CACP), Ministry of Agriculture & Farmers' Welfare. Approving body: the Cabinet Committee on Economic Affairs (CCEA), chaired by the Prime Minister. Legal status: MSP has no statutory backing; it is a policy instrument enforced through procurement, primarily by the Food Corporation of India (FCI) and state procurement agencies. Crops covered: 22 mandated crops — 14 Kharif, 6 Rabi, 2 commercial — plus MSP for Toria and de-husked coconut linked to rapeseed/mustard and copra respectively. 14 Kharif crops: Paddy, Jowar, Bajra, Maize, Ragi, Arhar (tur), Moong, Urad, Groundnut, Soybean, Sunflower, Sesamum, Nigerseed, Cotton.
MSP calculation — A2, A2+FL, C2
CACP computes three cost concepts: A2 — paid-out costs (seeds, fertilisers, hired labour, fuel, irrigation, lease rent if any). A2+FL — A2 plus the imputed value of family labour. C2 — comprehensive cost: A2+FL plus the imputed rent on owned land and interest on owned capital. Since Budget 2018-19, the government's stated norm has been MSP = at least 1.5 × A2+FL for all mandated crops. The M.S. Swaminathan Committee (2006) had recommended MSP = 1.5 × C2, which farmer unions continue to demand. The CACP also factors in demand-supply balance, cost-of-production trends, market price trends, input-output parity, inter-crop price parity, terms of trade between agriculture and non-agriculture, and a minimum 50% margin over A2+FL.
Headline MSP numbers — MY 2026-27 Kharif
Paddy common: ₹2,441/qt (up ₹72). Paddy Grade-A: ₹2,461/qt. Jowar (hybrid): higher; Bajra: ₹2,900/qt; Ragi: ₹5,205/qt; Maize: ₹2,410/qt. Arhar (tur), Moong, Urad: all raised. Groundnut: raised. Soybean (yellow): raised. Sunflower seed: +₹622/qt — biggest absolute hike. Sesamum: +₹500/qt. Nigerseed: +₹515/qt. Cotton (medium staple): +₹557/qt. The total cost of procurement (notional) is estimated at ₹2.6 lakh crore. Margins over A2+FL range from 50% to ~80%, with the highest margin in bajra and the lowest in some pulses.
Companion fact — WPI inflation in April 2026
India's WPI inflation hit 8.3% (provisional) in April 2026 — the highest in 3.5 years / 42 months — up sharply from 3.88% in March 2026. Drivers: Fuel & Power inflation surged to 24.71%, with crude petroleum & natural gas at 67.18% owing to West Asia tensions and the Strait of Hormuz blockade scare; basic metals and non-food articles also contributed. Composition of WPI basket (Base Year 2011-12): Primary Articles 22.62% (Food Articles, Non-Food Articles, Minerals, Crude Petroleum & Natural Gas); Fuel & Power 13.15% (Coal, Mineral Oils, Electricity); Manufactured Products 64.23% (22 sub-groups). Released by: Office of the Economic Adviser, DPIIT, Ministry of Commerce & Industry.
Must Remember
- •CCEA approved MSP hike for 14 Kharif crops for marketing season 2026-27 on 13 May 2026.
- •Highest absolute MSP hike: sunflower seed +₹622/quintal; cotton +₹557; nigerseed +₹515; sesamum +₹500.
- •Common paddy MSP fixed at ₹2,441/quintal (up ₹72); Grade-A paddy at ₹2,461/quintal.
- •Maize MSP raised to ₹2,410/qt; bajra ₹2,900/qt; ragi ₹5,205/qt.
- •Total estimated farmer payout ~₹2.6 lakh crore.
- •CACP recommends MSPs; CCEA (chaired by PM) gives final approval.
- •MSP covers 22 mandated crops + Toria and de-husked coconut (linked to mustard and copra).
- •WPI inflation hit 3.5-year high of 8.3% in April 2026; fuel & power inflation 24.71%.
Static GK
- •: CACP was set up in 1965 (then called Agricultural Prices Commission); renamed CACP in 1985.
- •: MSP was introduced in India in 1965-66 with wheat, as part of the Green Revolution architecture.
- •: FCI was established under the Food Corporations Act, 1964 and is headquartered in New Delhi.
- •: WPI base year is 2011-12; CPI base year is 2012.
- •: RBI uses CPI (combined) as its target for monetary policy under the Flexible Inflation Targeting framework since 2016.
- •: The M.S. Swaminathan Committee (National Commission on Farmers) submitted its final report in 2006.
Glossary
- MSP
- Minimum Support Price — a government-announced floor price at which it stands ready to procure 22 notified crops to insure farmers against price crashes.
- CACP
- Commission for Agricultural Costs and Prices — attached office of the Ministry of Agriculture; set up in 1965 to recommend MSPs.
- CCEA
- Cabinet Committee on Economic Affairs — chaired by the Prime Minister, takes final decisions on MSPs, divestment and major economic policy.
- A2+FL
- Cost concept = paid-out expenses (A2) plus imputed value of family labour; reference cost for MSP calculation since 2018-19.
- C2
- Comprehensive cost = A2+FL plus rent on owned land and interest on owned capital; Swaminathan formula uses 1.5×C2.
- WPI
- Wholesale Price Index — measures average change in prices of goods at first point of bulk sale; released monthly by the Office of the Economic Adviser, DPIIT.
- Kharif crops
- Crops sown with the onset of the south-west monsoon (June-July) and harvested in autumn — paddy, maize, cotton, soybean, pulses, oilseeds, etc.
- FCI
- Food Corporation of India — central procurement and distribution agency for foodgrains; main MSP-implementing arm.
Timeline
- 1964Food Corporations Act passed; FCI set up.
- 1965Agricultural Prices Commission (later CACP) constituted; MSP introduced for wheat.
- 1985Agricultural Prices Commission renamed Commission for Agricultural Costs and Prices (CACP).
- 2006Swaminathan Committee recommends MSP = 1.5 × C2.
- 2018Budget announces MSP = at least 1.5 × A2+FL for all mandated crops.
- 2020-21Farmer protests demand legal guarantee of MSP.
- 202613 May — CCEA approves MSP hike for 14 Kharif crops for MY 2026-27; WPI hits 8.3% in April.
- →MSP recommending body = CACP (1965); approving body = CCEA (chaired by PM).
- →14 Kharif + 6 Rabi + 2 commercial = 22 crops under MSP.
- →Formula since 2018 = 1.5 × A2+FL; Swaminathan demand = 1.5 × C2.
- →Top hike Kharif 2026-27 = sunflower +₹622 (and cotton +₹557).
- →Paddy common 2026-27 = ₹2,441/qt; Bajra = ₹2,900; Ragi = ₹5,205.
- →WPI April 2026 = 8.3% (3.5-year high); base year 2011-12.
- →WPI weights → Primary 22.62%, Fuel & Power 13.15%, Manufactured 64.23%.
Exam Angles
MSP recommending body = CACP (1965); approving body = CCEA (chaired by PM).
CCEA's MSP hike for 14 Kharif crops for MY 2026-27 — biggest absolute increase for sunflower seed — comes amid the April 2026 WPI spike to 8.3% and is the second annual signal in succession of using MSP as a producer-protection tool.
Mains Q · 250wExamine the rationale and limits of using Minimum Support Prices as the principal tool of farm-income support in India. In the context of the MY 2026-27 hikes and the April 2026 WPI spike, discuss reforms needed to balance producer support, fiscal sustainability and cropping diversification. (250 words)
Flashcard
Q · The Cabinet Committee on Economic Affairs on 13 May 2026 approved higher MSPs for 14 Kharif crops for marketing season 2026-27 — biggest hike for sunflower seed (+₹622/qt) — entailing an estimated ₹2.tap to reveal
Connections & Comparisons
- ↔Connects to the Public Distribution System — MSP-procured grain feeds the NFSA-mandated PDS distribution.
- ↔Links to the edible-oil import dependence (~60%) — the disproportionate sunflower-seed hike is a self-sufficiency push.
- ↔Cross-walks to the Shanta Kumar Committee (2015) on FCI restructuring.
- ↔Touches on the farmer protests of 2020-21 and the demand for legalising MSP at 1.5 × C2.
- ↔Sits inside the larger inflation story — April 2026 WPI at 8.3% on fuel surge from West Asia tensions.
- ↔Feeds the budget-cycle fiscal-deficit story — food subsidy and FCI economic cost are sensitive to MSP changes.