Newspapers help shape our understanding of social, political, and economic issues. They are powerful sources of knowledge, which is why they are essential tools for candidates preparing for top competitive exams like RBI Grade B, SEBI Grade A, and NABARD Grade A. However, finding reliable and concise news analysis can be tough. That’s where Vishleshan for regulatory exams steps in. It offers an in-depth analysis of important articles from leading financial newspapers such as Mint, making your exam preparation smarter and faster. Let’s dive into the news highlights and insights for 10th June 2025.
Context: Centre plans to align MSP for tur, urad, and masur with demand trends and procurement to incentivize farmers, cut the import bill, and push for self-reliance in key pulses.
Source: Mint
India is undertaking a significant review of its Minimum Support Price (MSP) formula for key pulses; a move aimed at boosting domestic production and reducing reliance on imports. This initiative is critical as pulses are a staple in the Indian diet and ensuring their self-sufficiency is vital for food security and farmer income. But first, let’s understand the current MSP architecture.
Minimum Support Price:
The idea of MSP was first proposed in 1966 and it was inspired by the Green Revolution.
The Minimum Support Price (MSP) for a commodity refers to the price at which the government is obligated to purchase the produce from farmers if the market price falls below this threshold.
· As such, MSPs provide a floor for market prices, and ensure that farmers receive a certain “minimum” remuneration so that their costs of cultivation (and some profit) can be recovered.
· The MSPs serve one more policy purpose. Using them, the government incentivises the production of certain crops, thus ensuring that India does not run out of staple food grains.
22 Crops covered by MSPs include:
· 7 types of cereals (paddy, wheat, maize, bajra, jowar, ragi and barley),
· 5 types of pulses (chana, arhar/tur, urad, moong and masur),
The mandated crops include 14 crops of the kharif season, 6 rabi crops and 2 other commercial crops.
Please note that there is a separate mechanism for Sugarcane, called the “Fair and Remunerative Price (FRP)”. This decision was taken in 2009.
The MSPs are announced by the Cabinet Committee on Economic Affairs (Union government) on the recommendations of the Commission for Agricultural Costs and Prices (CACP).
MSP Calculation:
MSP, presently, is based on a formula of 1.5 times the production costs.
The CACP projects three kinds of production costs for every crop, both at state and all-India average levels.
– A2 covers all paid-out costs directly incurred by the farmer, in cash and kind, on seeds, fertilisers, pesticides, hired labour, leased-in land, fuel, irrigation, etc.
– A2+FL includes A2 plus an imputed value of unpaid family labour.
– C2: Estimated land rent and the cost of interest on the money taken for farming are added to A2 and FL.
In order to calculate MSP, the government uses A2+FL cost. The criticism of A2+FL is that it doesn’t cover all costs, and that a more representative measure, C2, needs to be used.
For example, in the 2017-18 rabi season, CACP data shows that C2 for wheat was 54% higher than A2+FL. The Swaminathan Commission had also stated that the MSP should be based on the comprehensive cost of production, which is the C2 method.
India’s Production, Import, and Export of Pulses:
Pulses are a cornerstone of food security in India, being a primary source of protein for a large portion of the population. Ensuring adequate domestic production is thus a key policy objective.
India’s Production of Pulses in 2024-25: India’s total pulse production for 2024-25 is estimated to be 25.24 million tonnes (mt), which is higher than the 24.24 mt produced in the previous year and lower than 26 mt produced in 2022-23.
For the 2025-26 rabi crop, moong output is estimated at 3.8 mt, which is cultivated three times a year. The previous year’s production was 1.8 mt.
The article mentions a decline in yields for tur (pigeon pea), with yields falling from 914 kg per hectare to 600 kg per hectare. Tur is cultivated once a year.
India’s Export and Import of Pulses: India has historically been a significant importer of pulses to meet domestic demand.
Imports: India’s pulse imports surged from 2.6 mt in FY23 to 6.7 mt in FY25—a nine-year high—due to a favourable duty regime and softer international prices. This dramatic increase in imports highlights the current deficit in domestic production.
Exports: Exports are limited for domestic consumption. As per the pulses export data from India, India exported 0.59 million tonnes of pulses to the global market in 2023–2024.
Trends in Export and Import of Pulses:
Rising Imports: The trend clearly indicates a sharp increase in imports of pulses, making India vulnerable to global price fluctuations and supply chain disruptions. This surge is attributed to “favorable duty regime and softer international prices”.
Fluctuating Domestic Production: While efforts are being made to boost domestic production, factors like “poor weather” continue to cause fluctuations.
Minimum Support Price (MSP) as a Nudge to Boost Production
The Minimum Support Price (MSP) is a crucial policy tool used by the Indian government to protect farmers from market price volatility. While the MSP for tur for the 2025-26 crop year is set at ₹8,000 per quintal, moong fetches a higher ₹8,868 per quintal, despite lower demand.
Current Review of MSP Formula: The Centre is exploring a plan to review the formula it uses to calculate the MSP for key pulses such as tur (arhar), urad (black gram), moong (green gram), and masur (lentil).
Why MSP is Crucial for Pulses: The article states that “this comes amid rising concerns around stagnant production, growing imports, and skewed price incentives that fail to reflect current demand trends”. The current MSP system for pulses is criticized for being “skewed” and not reflecting “current demand trends”. Farmers often face a situation where “floor prices that are the same as input costs, or even lower, discourage farmers from planting more pulses”.
Boosting Production to Reduce Imports: The primary objective of reviewing the MSP formula is to “boost production to reduce the imports” and achieve “Aatmanirbharbharta” (self-reliance) in pulse production. By offering a more attractive and demand-reflective MSP, the government aims to incentivize farmers to increase pulse cultivation and thus reduce the reliance on foreign supply.
A Stakeholder Consultation: A “stakeholder consultation” with relevant ministries is “expected later this month to outline a strategy” for the revised MSP formula.
In essence, the comprehensive review of the MSP formula for pulses is a strategic move to address India’s persistent challenges in pulse production, curb burgeoning imports, and strengthen food security, all while empowering farmers.
Context: India’s chance to emerge as the world’s next factory would brighten if Indian policy turns markedly more export-oriented and less protectionist. Trump-induced trade flux should make us give dynamic trade blocs—like the CPTPP if not RCEP—another look.
Source: Mint
The global economic landscape is undergoing significant shifts, with the United States withdrawing from certain aspects of global trade under the previous administration. In this evolving environment, India faces crucial questions regarding its international trade strategy, particularly its role in global manufacturing and engagement with regional trade blocs.
Share of China and India in Global Manufacturing
Manufacturing is a cornerstone of global economic power and trade.
China’s Dominance: For decades, China has been the undisputed “world’s factory”, commanding a substantial share of global manufacturing output. Its integrated supply chains, extensive infrastructure, and large labour force have made it a manufacturing powerhouse, accounting for roughly 28-30% of global manufacturing output in recent years. This dominance is highlighted by the article’s statement that “the rich world would like supply chains shifted out of China, at least in part.”
India’s Potential and Current Share: India, on the other hand, has a relatively smaller share in global manufacturing. The article implicitly suggests India’s current share is not as large as its potential, noting that “Vietnam, Thailand and Malaysia have attracted more nodes in supply networks from China than we have.” India’s share of global manufacturing GVA (Gross Value Added) is typically estimated to be in the range of 3-4%. The article emphasizes India’s “potential as the world’s next big factory” due to its “diversity, sophistication and scale of capabilities that our overall economy and workers represent”.
Decoding the Three Questions in the Article
The article poses three fundamental questions for India’s policymakers in the current global economic context:
Does international trade remain an instrument of improving efficiency in production and consumption?
In favour (Yes): The article strongly advocates for this. It argues that “greater trade openness” fosters a “more efficient economy on the whole”. It also states that for India’s “production base to turn export oriented, it must be able to rely on easy and predictable imports of inputs and other needs.” Furthermore, “falling tariff protection can…expose domestic players to competition and driving business efficiency.”
Against (No/Scepticism): While the article doesn’t explicitly argue against, the context of “America’s secession from the global economy under US President Donald Trump” suggests a global trend towards protectionism, implying that some might question the continued efficacy of free trade given such actions. The “additional layers of protection” India itself has adopted since 2017 also reflect a past stance that might implicitly contradict this notion.
2. Does US abdication of its traditional leadership of the rules-based global system mean the end of rules for mutual engagement among other nations?
In favour (No, rules should continue): The article, by discussing regional trade blocs and advocating for India’s participation, implicitly argues that rules for mutual engagement are still vital, even without traditional US leadership. The emphasis on “mutual engagement among other nations” suggests a need for new frameworks or strengthening existing ones.
Against (Yes, uncertainty/chaos): The phrase “Trump-battered world trade goes into turmoil” indicates that the US withdrawal creates uncertainty and potential for a less predictable global trading environment, where rules might indeed be less respected or difficult to enforce.
3. Do regional trade blocs make sense for a country like India?
In favour (Yes): The article explicitly agrees with former Planning Commission deputy chairman Montek Singh Ahluwalia’s view that India should “join some of the regional trading arrangements India had been invited to but walked away from.” It suggests that joining such blocs is “one way to pre-set protective shields on a downslope” and allows India to “broaden our global engagement.” Regional blocs can facilitate easier and predictable imports of inputs, which is crucial for an export-oriented production base.
Against (No/Scepticism): The article mentions India’s past decision to “gave up on the Regional Comprehensive Economic Partnership in anxiety over Beijing’s role in it.” This indicates that concerns about specific members or the nature of certain blocs can lead to a negative assessment. The author also notes that India lacks an edge in “several sectors right now,” suggesting that broad openness without protection might be challenging initially.
Ex-Planning Commission Deputy Chairperson’s Views and Author’s Agreement
Montek Singh Ahluwalia, the former Planning Commission deputy chairman, provided clarity on these matters in a recent media interaction. As a “believer in the benefits of globalised growth”, his key views are:
India should “shed some of the additional layers of protection it has adopted, particularly since 2017.”
India should “join some of the regional trading arrangements India had been invited to but walked away from.”
The author expresses “broad agreement with this approach.” The author agrees because:
In the face of the US “withdraw[ing] behind tariff walls,” India should pursue “greater trade openness—not just to counteract its effects, but to foster a more efficient economy on the whole.”
This strategy is crucial for India to emerge as the “world’s next big factory” and host supply chains shifting out of China.
Lowering tariffs (uniformly in single digits across categories) will “expose domestic players to competition and driving business efficiency”, allowing sectors with a “competitive edge to emerge on their own”, and ultimately leading to “global competitiveness.”
CPTPP and RCEP: Regional Partnership Analysis
The article discusses two significant regional trade blocs:
What it is: RCEP is a free trade agreement (FTA) between the ten member states of the Association of Southeast Asian Nations (ASEAN), along with Australia, China, Japan, New Zealand, and South Korea. It is the world’s largest free trade area.
India’s stance: India “gave up on the Regional Comprehensive Economic Partnership in anxiety over Beijing’s role in it” in 2019. This highlights India’s concerns about China’s trade practices and their potential impact on India’s domestic industries within the RCEP framework.
Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP):
What it is: CPTPP is a free trade agreement between 11 Pacific Rim countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. The UK joined recently in 2023. Notably, CPTPP “excludes China”.
Why CPTPP can be a better partnership for India compared to RCEP:
Exclusion of China: The primary advantage for India in CPTPP is that it “excludes China”. Given India’s “anxiety over Beijing’s role” in RCEP and China’s “scandalous” record on fair trade, CPTPP offers a trade bloc without direct competition from China’s manufacturing might.
Access to Developed Markets: CPTPP includes several developed economies like Japan, the UK, Canada, Australia, and New Zealand. Joining this bloc would give Indian manufacturers preferential access to these high-value markets, boosting export opportunities.
Supply Chain Diversification: CPTPP aligns with the global desire to “shift supply chains out of China.” By integrating with CPTPP members, India can become a more attractive alternative for global supply chain diversification.
Higher Standards: CPTPP is known for its high standards on labour, environment, intellectual property, and state-owned enterprises. Joining it could push India to adopt similar high standards, improving its overall business environment and global competitiveness.
Potential Rise in India’s Share in Global Manufacturing through Regional Partnerships
If India embraces greater trade openness and strategically joins regional partnerships like CPTPP, it can significantly boost its share in global manufacturing.
Hosting Shifted Supply Chains: India is uniquely positioned as the “only country that can host the supply chains that much of the rich world would like shifted out of China.” By participating in trade blocs, India can actively facilitate this shift, becoming a key node in diversified global supply networks.
Improved Efficiency and Competitiveness: Lowering tariff barriers through trade agreements will expose domestic firms to international competition, driving down costs and forcing them to become more efficient. This fosters “global competitiveness.”
Access to Inputs and Markets: Membership in trade blocs ensures “easy and predictable imports of inputs”, which is vital for an export-oriented manufacturing base. Simultaneously, it provides preferential access to large consumer markets within the bloc, boosting demand for Indian manufactured goods.
Attracting Foreign Investment: Participation in well-regarded trade blocs signals stability and market access, making India a more attractive destination for foreign direct investment (FDI) into its manufacturing sector.
Structured Protection Withdrawal: Regional blocs can offer a structured path for India to gradually withdraw early-stage protection and state support for its nascent industries, allowing them to mature in a competitive environment.
In conclusion, by shedding protectionist layers and strategically engaging with regional trade blocs like CPTPP, India can leverage its inherent potential to significantly increase its footprint in global manufacturing, moving closer to becoming the “world’s next big factory.”
Join our unique Telegram group immediately to skyrocket your preparation for Regulatory exams via expert guidance, top tips, perfect feedback, and much more!
Asad specializes in penning and overseeing blogs on study strategies, exam techniques, and key strategies for SSC, banking, regulatory body, engineering, and other competitive exams. During his 3+ years' stint at PracticeMock, he has helped thousands of aspirants gain the confidence to achieve top results. In his free time, he either transforms into a sleep lover, devours books, or becomes an outdoor enthusiast.