Question

The Union Budget for _________ announced that farmers in India would be given an MSP of at least one and a half times the cost of production.

• A. 2014-15
• B. 2017-18
• C. 2018-19
• D. 2020-21

Hint:

The cost of production is estimated by the Commission for Agricultural Costs and Prices (CACP) under three main categories: $A2$ (paid-out costs), $A2+FL$ (paid-out costs plus family labor), and $C2$ (comprehensive cost including land rent and capital interest).

Answer 1

The Correct Option is C

Step 1: Understanding the Concept:
Minimum Support Price (MSP) is a form of agricultural market intervention by the Government of India to insure agricultural producers against any sharp fall in agricultural prices.
This question focuses on the policy shift that linked the calculation of MSP directly to the cost of cultivation.

Step 2: Detailed Explanation:
For years, farmer organizations in India had demanded the implementation of the National Commission on Farmers (Swaminathan Commission) recommendation.
This recommendation suggested that the MSP should be set at least $50\%$ more than the weighted average cost of production.
In the Union Budget of 2018-19, the then Union Finance Minister formally announced that the government had decided to implement this principle.
The budget declared that for all the declared kharif, rabi, and other commercial crops, the MSP would be fixed at a level of at least $1.5 \text{ times}$ (one and a half times) the cost of production.
To compute this, the Commission for Agricultural Costs and Prices (CACP) uses the $A2 + FL$ cost formula, which includes all actual paid-out expenses by the farmer plus the imputed value of family labor.
This historic announcement in the 2018-19 Union Budget aimed to double farmers' income and provide price stability across 22-25 mandated crops.

Step 3: Final Answer:
Therefore, the Union Budget of 2018-19 made this MSP announcement, corresponding to option (C).