The government increases MSP for the Rabi season, benefits farmers, and inflation will remain stable

MSP: The government has increased the Minimum Support Price (MSP) for the Rabi season. The MSP for crops like wheat, gram, lentils, and mustard has been increased by 4% to 10%. This will benefit farmers, while the impact on inflation will be limited.

MSP: The central government has given a major gift to farmers during the festive season. An increase in the Minimum Support Price (MSP) for Rabi crops has been announced. While this decision will help increase farmers' income, experts believe its impact on retail inflation will be limited. A report by ICICI Bank Global Markets has clarified that due to adequate buffer stocks and good reservoir levels, a spike in inflation is unlikely.

MSP Increase for the 2026-27 Rabi Season

On October 1, 2025, the central government announced revised MSPs for the 2026-27 Rabi marketing season. Prices of major crops such as wheat, barley, chickpea, lentils, mustard, and sunflower have been increased by 4% to 10.1%.

Wheat: ₹2,585 per quintal (+6.6%)
Barley: ₹2,150 per quintal (+8.6%)
Chana: ₹5,875 per quintal (+4.0%)
Lentils: ₹7,000 per quintal (+4.5%)
Mustard/Raisa: ₹6,200 per quintal (+4.2%)
Sunflower: ₹6,540 per quintal (+10.1%)

Support Prices Higher than Production Costs

In the 2018-19 budget, the government promised that the MSP would be at least 50% higher than the production cost. The same policy has been adopted this time as well. For example, the MSP for wheat is 109% higher than the cost of production, while the margin for lentils is 89%, and for mustard, it is 93%. This will ensure farmers receive better returns for their labor and encourage crop diversification.

Why is the impact on inflation limited?

MSP increases are likely to put pressure on food prices, but reports suggest that this time the impact will be limited. The reasons are:

Adequate buffer stocks

Good water levels in reservoirs

Stability of the supply chain

The average MSP increase, based on the Consumer Price Index (CPI), has been 5.6%, lower than the 5.9% increase in 2025-26 and 5.8% in 2024-25. This means that this time the MSP increase will not significantly increase retail inflation. The MSP increase will prove beneficial for farmers as they will receive better prices for their crops. Consumers, meanwhile, are less likely to experience a sudden spike in the prices of everyday food items.

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