Reportedly the government decides the prices of Rabi and Kharif crops every year. This MSP is decided on the recommendation of the Commission for Agricultural Costs and Prices (CACP). CACP decides the prices of crops based on their cost and yield and sends them to the government. The government announces MSP after discussing these suggestions. Meanwhile CACP committee was established in the year 1965. The committee mainly consists of four members. It consists of a Chairman, a Member Secretary and two other Secretaries. On the recommendation of the committee, the government of india first announced the minimum support price for wheat in the year 1966-67.
Perhaps for the first time, the government had fixed the price of wheat at Rs 54 per quintal. At that time there was Indira Gandhi's government in the country. It is said that the Green Revolution started from here. After wheat, MSP was gradually implemented on other crops also.
Moreover only 23 crops have been kept under the ambit of MSP. These include 7 crops of cereals, 5 of pulses, 7 of oilseeds and four commercial crops. These include crops like paddy, wheat, maize, barley, millet, gram, lentils, urad, moong, tur, mustard, soybean, jute, cotton, sunflower, sugarcane. Every year the MSP is decided even before the sowing of crops. Many farmers decide to sow crops only after seeing the MSP. After the crop is ready, the government buys grains at MSP through different agencies. These grains are stored in warehouses. After this, it is sent to the country or abroad as per the demand. In the general budget of 2018-19, the government had announced that the MSP of all essential crops will be fixed at least 1.5 times the production cost.
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