Govt set to tweak MSP norms for periodic price hikes of minor forest products

New Delhi: The Centre is set to restructure the minimum support price (MSP) mechanism for minor forest produce (MFP) to ensure periodic hikes benefiting tribal communities.

The tribal affairs ministry has asked The Energy and Resources Institute (TERI) to study MFPs covered under the MSP framework and examine whether the list needs to be rationalised. TERI will conduct ground surveys to assess how the existing system can be tweaked to ensure better prices for tribals depending on forest produce for livelihood. According to sources, TERI will also work out a mechanism to ensure a periodic increase in MSP.

The government is likely to increase MSP from the next financial year, ending a six-year freeze on rates. The scheme, launched by the Congress-led UPA government in 2013-14, provides a guaranteed minimum price for identified forest produce collected by tribals, particularly those living in remote areas. The produce is sold at village haats, with state government agencies stepping in to procure it whenever market prices fall below the notified MSP.


A senior official told ET: "MSP needs to be rationalised because there are certain products that fetch a much higher price than what we have fixed. We need to understand what should be done in case of a glut in the market. Also, there are more common products that tribals gather, like gum or lac. What price and what price-fixing mechanism one should follow will be studied by TERI."

Although the scheme's guidelines provide for MSP revision every three years, rates have remained unchanged since 2020. The proposed increase follows concerns raised by MPs during two successive meetings of the parliamentary standing committee on social justice and empowerment. Members pointed out that the prolonged stagnation in MSP was leaving forest-dependent communities vulnerable to exploitation by middlemen, forcing them to sell their produce at lower prices.

The last revision was undertaken in May 2020 during the Covid-19 outbreak, when village haats were shut to enforce social distancing. With migrant workers returning to their villages and livelihoods disrupted, the Centre had stepped in to ensure that tribal households had money to meet their basic needs. MSP was increased by 16-30% across different products while the number of forest produce items covered under the scheme was expanded.

The list, which covered 49 products in January 2019, was expanded to 87 by November 2020, with two additions that year. The proposed revision is expected to benefit tribals across several states, including Himachal Pradesh and Gujarat, both of which are scheduled to go to assembly polls next year.