GS Mains Model Question & Answer : Discuss the aim of MSP and does it beneficial to the Indian economy? Bring out the challenges in MSP Regime . Comment

Q. Discuss the aim of MSP and does it beneficial to the Indian economy? Bring out the challenges in MSP Regime. Comment

Model Answer:

Discuss the aim of MSP and does it beneficial to the Indian economy? Bring out the challenges in MSP Regime.

Minimum Support Price (MSP) is a form of market intervention by the Government of India to insure agricultural producers against any sharp fall in farm prices. The minimum support prices are announced by the Government of India at the beginning of the sowing season for certain crops on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP). MSP is price fixed by Government of India to protect the producer - farmers - against excessive fall in price during bumper production years. The minimum support prices are a guarantee price for their produce from the Government.

The major objectives are the followings:

1) to support the farmers from distress sales and to procure food grains for public distribution. In case the market price for the commodity falls below the announced minimum price due to bumper production and glut in the market, govt. agencies purchase the entire quantity offered by the farmers at the announced minimum price.

2) To protect the consumer’s interest by keeping the prices at reasonable level.

Challenges:

Delay in setting up of procurement center.

Exploitation by commission agent .

Less remunerative prices to farmers.

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