New Delhi- The Central Government has advised certain states, including Kerala, to review and potentially discontinue the practice of providing bonus incentives over and above the Minimum Support Price (MSP) for paddy and wheat. This was revealed in a written reply to an unstarred question raised by Rajya Sabha MP Dr. John Brittas in the Rajya Sabha on March 13.
The query, sought details on whether the government had recently directed states to discontinue such bonuses, the reasons behind it, assessments of its impact on farmers, proposed remedial measures, and considerations for state-specific MSP frameworks or revisions, including demands to set paddy MSP at ₹40 per kg.
In his response, Minister of State for Agriculture and Farmers Welfare, Bhagirath Choudhary, confirmed that a letter dated January 9, from the Secretary, Department of Expenditure, Ministry of Finance, was sent to Chief Secretaries of some states. The letter contained suggestions for states to align their bonus policies with national priorities, citing concerns over surplus stocks, increased storage costs, and fiscal burdens from excess production of paddy and wheat.
The minister noted that, according to information from the Kerala Government, the state has no proposal to review or withdraw its existing policy of providing an incentive bonus over the MSP for paddy. Currently, Kerala farmers receive ₹3,000 per quintal for paddy (comprising the central MSP of ₹2,369 per quintal plus a state bonus of ₹631 per quintal). If the central suggestion were adopted, farmers in the state would face a direct loss in income.
The government emphasized that MSPs are fixed annually for 22 mandated crops, including paddy and wheat, on an all-India basis, not region- or state-specific, based on recommendations from the Commission for Agricultural Costs and Prices (CACP), after consulting states and relevant ministries. Since the 2018-19 Union Budget announcement, MSPs have been set at a minimum of 1.5 times the all-India weighted average cost of production, benefiting farmers nationwide.
Highlighting the positive outcomes of higher MSPs, the reply included data on procurement volumes and MSP payments for paddy and wheat from 2014-15 to 2025-26 (up to February 2026). For paddy, total procurement stood at 8,418 lakh metric tonnes with an MSP value of ₹16.08 lakh crore, while wheat procurement was 3,358 lakh metric tonnes valued at ₹6.38 lakh crore.
On the impact of discontinuing bonuses, particularly amid rising input costs, inflation, and living expenses, the response did not provide a specific assessment. It reiterated the national MSP framework and procurement benefits without addressing state-specific incentives directly.
Regarding remedial measures to protect farmers' incomes and demands from states like Kerala for a state-specific MSP or revising paddy MSP to ₹40 per kg, the minister made no commitments to changes, stressing the uniform national approach and the existing 50% return principle over production costs.
Dr. John Brittas, in his remarks following the reply, criticized the Centre's directive as effectively instructing states not to offer additional support beyond the central MSP. He argued that accepting such directions would directly reduce farmers' income in Kerala and accused the Centre of sacrificing paddy and wheat farmers' livelihoods to its policies. He highlighted that agriculture remains a state subject under the Constitution and praised Kerala for informing the Centre that it will not withdraw the bonus, underscoring the need to protect farmers from central "diktats."