The Minimum Support Prices (MSP) for crops in India are fixed on the recommendations of the:

The Government of India announces Minimum Support Prices for major crops on the basis of recommendations made by the CACP. The final decision is taken by the Cabinet Committee on Economic Affairs (CCEA), chaired by the Prime Minister.

About the CACP:

• It was set up in January 1965 as the Agricultural Prices Commission, during the food crisis of the mid-1960s.
• It was renamed the Commission for Agricultural Costs and Prices in 1985, to reflect that it also considers costs of production.
• It is an attached office of the Ministry of Agriculture and Farmers' Welfare.
• It is an advisory body; its recommendations are not binding on the government.
• What is MSP?
• MSP is the price at which the government guarantees to buy crops from farmers, to protect them from a sharp fall in market prices.

Crops covered:

• MSP is announced for 22 mandated crops: 14 kharif crops, 6 rabi crops and 2 commercial crops (jute and copra).
• For sugarcane, the government announces a Fair and Remunerative Price (FRP) instead of MSP, also based on CACP recommendations, under the Sugarcane (Control) Order.

Factors considered by the CACP:

• Cost of production (A2, A2+FL and C2 costs).
• Demand and supply, domestic and international prices, and price trends.
• Inter-crop price parity and the terms of trade between agriculture and industry.
• Since 2018-19, MSPs have been fixed at least 1.5 times the A2+FL cost (paid-out costs plus family labour).

Procurement:

The Food Corporation of India (FCI) and state agencies procure wheat and rice at MSP for the central pool, which supplies the public distribution system and buffer stocks.

Why not the other options?

• ✗NITI Aayog is the government's policy think tank, which replaced the Planning Commission in 2015.
• ✗The Food Corporation of India procures, stores and distributes food grains, but does not recommend MSP.
• ✗NABARD is the apex bank for agriculture and rural development credit.