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    Insights Mind Maps: Issues Related To MSP

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    rushikesh dharmadhikari
    issues related to MSP

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    Insights Mind Maps: Issues Related To MSP

    Uploaded by

    rushikesh dharmadhikari
    39 views2 pages
    issues related to MSP

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    Issues-related-to-MSP

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    issues related to MSP

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    39 views2 pages

    Insights Mind Maps: Issues Related To MSP

    Uploaded by

    rushikesh dharmadhikari
    issues related to MSP

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    Insights Mind maps

    General Studies – 3; Topic: Issues related to direct and indirect farm subsidies and
    minimum support prices

    Issues related to MSP


    1) Introduction
     MSP is the minimum price paid to the farmer for procuring food crops.
     It offers an assurance to farmers that their realisation for the agricultural produce will not fall
    below the stated price.

    2) Benefits of MSP
     Incentivise production of a specific food crop which is in short supply.
     Protects farmers from any sharp fall in the market price of a commodity.
     Ensures that the country’s agricultural output responds to the changing needs of its consumers.
     Ex: The government hiked the MSP of pulses to expand sowing of pulses.
     Higher farm profits will encourage farmers to spend more on inputs, technology etc
     Protect farmers from the unwarranted fluctuation in prices, provoked
    by the international level price variations.

    3) Why is it important
     Almost half of India’s population is dependent on agriculture for livelihood.
     Farming is a risky business with the farmer’s income dependent on the vagaries of weather, as well
    as local and international price trends.
     The MSP shields farmers to an extent, from such risks, by guaranteeing a floor price for their
    produce.
     To achieve food security and tackle shortages of key food items.

    4) Some Facts
     MSPs are usually announced at the beginning of the sowing season.
     MSP is recommended by the Commission for Agricultural Costs and Prices (CACP).
     Cabinet Committee on Economic Affairs approves MSP.
     The Food Corporation of India procures food grain under the price support scheme.

    5) Concerns / Challenges
     Sharp and frequent increases in MSP can feed inflation too.
     It is believed that it was MSP increases on paddy and wheat that fuelled high food inflation in the
    years to 2013.
     Government procurement at MSP is benefiting the large traders than farmers.
     Small farmers typically do not have enough marketable surpluses.
     Their crop is usually sold to traders at low post-harvest prices in the village itself or the nearest
    mandi.
     According to recent research, farmers may typically get as little as 25% of the price that consumers
    finally pay.
     The input costs have been rising faster than sale prices, squeezing the meagre income of the small
    farmers and driving them into debt.

    www.insightsonindia.com Page 1 www.insightsias.com


    Insights Mind maps

     MSP is attractive towards wheat and rice which is produced by large farmers. Small farmers who
    mostly dependent on vegetables, pulses, coarse grains are at disadvantage.
     The payments are delayed when the farmers are in immediate need of cash.
     In some states, the awareness about the time of their announcement is very low.
     The reason for not selling at MSP was that the purchase centres were located at distance which
    required high transportation costs.

    6) Recommendations by NITI Ayog


     The awareness to farmers and timely dissemination of information till the lowest level so that it
    would increase the bargaining power of the farmers.
     Timely payment should be ensured.
     MSP should be announced well in advance of the sowing season so as to enable the farmers to plan
    their cropping.
     Improved facilities at procurement centres, such as drying yards, weighing bridges, toilets, etc.
     More godowns should be set up and maintained properly for better storage and reduction of
    wastage.
     The criteria for fixing MSP should be current year’s data and based on more meaningful criteria
    rather than the historical costs.
     The Procurement Centres should be in the village itself to avoid transportation costs.
     The MSP scheme requires a complete overhaul in those States where the impact of the scheme is
    ‘nil’.

    7) Way Forward
     Revision of MSP and its provisions are required. Diversification towards other crops like pulses must
    be done.
     Systematic administrative mechanism that includes personnel, system, infrastructure and scientific
    mechanism.
     Pre and post planning for the procurement at every location so that all are aware of the activities
    planned and there are no delays or gaps in the system.
     The monitoring at every phase for the efficiency of the process and accountability of the people
    involved in its implementation.
     The ambitious projects like e-NAM, doubling farmer’s income by 2022, price stabilisation fund,
    implementation of Swaminathan and Shanta Kumar committee is required.

    www.insightsonindia.com Page 2 www.insightsias.com

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