The Finance Ministry expressed concerns on the fiscal impact of the new minimum support price scheme, and asked the government's think tank Niti Aayog to rework the cost structure, sources said.

The annual cost of the Market Assuarance Scheme could cost an estimated Rs 40,000 crore, while the cost of implementing the Bhaavantar model was estimated at below Rs 25,000 crore, according to Niti Aayog.

The implementation costs could settle around Rs 30,000 crore per year if both the schemes were offered to the states, the sources added.

The finance ministry was in favour of the Bhaavantar model of MSP, as the overall cost was significantly lower for the government, sources said.

The centre and the states are currently examining two options for a new MSP mechanism, the Market Assurance Scheme and the Bhaavantar Yogana Model.

The cost for the new MSP mechanism would be in addition to the food subsidy of Rs 1,60,000 crore for the financial year 2019.

In his annual budget speech, then finance minister Arun Jaitley had announced a new MSP mechanism and promised to buy produce at one and a half times the cost of production.

This is a developing story and will be updated with more details.

First Published:May 18, 2018 3:40 PM IST