Finance Minister Arun Jaitley, in his 2018-19 Budget speech, had announced that henceforth all MSPs would in-principle be fixed at 50 per cent more than their cost of production (A2+FL) and directed the NITI Aayog to finalise a procurement model that would ensure that farmers get the benefit of MSP.
Accordingly, the Aayog has come up with a paper highlighting three models of procurement, including MAS, PDP, and also procurement by private agencies. The paper was finalized after extensive discussion with states.
Under the MAS, the expenditure could be anything between Rs 405 billion and Rs 540 billion annually, depending upon the extent of loss shared. Under the PDP scheme, the expenditure is expected to be less than Rs 300 billion.
However, Central government officials said that the expenditure could be much less somewhere around Rs 200-250 billion.