Syllabus: GS-III
Subject: Economy
Topic: Agriculture and allied
Issue: Minimum Support Price
Context: Farmers are protesting demanding a legal agreement on Minimum Support Price (MSP).
Minimum Support Price (MSP):
- It is a form of market intervention by the Government of India to insure agricultural producers against any sharp fall in farm prices.
- The government can “guarantee” MSP only on the crops and the quantities that it buys.
- It cannot procure the entire produce brought by farmers to the mandis.
- Nor can it enforce MSP on private trade.
- Private players might choose not to buy the product if MSP is imposed instead of leaving the prices to demand and supply terms.
Way forward:
- Crop insurance and timely payout of claims.
- A minimum income support (MIS) for farmers , that can be given via per-acre or per-farmer direct benefit transfers.
- An MIS, in combination with a phase-out of water, electricity and fertiliser subsidies, will induce much-needed crop diversification.
