Plainly on MSP: Farmers Protest

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.
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