Minimum Support Price: Significance, and Related Issues

Minimum Support Price: Significance, and Related Issues

MSP (Minimum Support Price) is the cost at which the public authority buys crops from the farmers, to guarantee farmers against any sharp fall in agricultural income.

It is declared by the Government based on the proposal of the Commission for Agricultural Cost and Prices (CACP), at the start of the planting season. The significant goals are to help the small and marginal farmers from low-profit deals and to get food grains for public conveyance in India.

It is a significant thing in India’s farming price policy. Just 6 percent or less, farmers can sell their yields at a high cost over Minimum Support Price. 

The MSP framework was begun in 1966-67 for wheat and extended further to incorporate other fundamental food crops and afterward offered to the poor under the public distribution framework under subsidized rate. 

Is the MSP Different in different states?

Because of the variety in irrigation and wages, the expense of a similar yield changes from one state to another. However, there is no draft of the local Minimum Support Price, so there is one MSP for the whole country. 

Significance of Minimum Support Price –  

Fixed Remunerations– The farmers are financially insured against the impulses of price fall in the market. It gives security to farmers from crop loss and price uncertainty. 

Help in Decision Making– MSP are reported toward the start of the planting season, this assists farmers with settling on the best choices of crop that they should plant. This development data assists the farmer with settling the best choice with regards to which yield to plant for the most extreme monetary advantage inside the restrictions of his agricultural land size, environment, and irrigation framework. 

Crop Diversification – The MSP declared by the Government of India without precedent for 1966-67 for wheat has been reached out to around 24 crops at the present. This has urged the farmers to develop these different crops to maximize their agricultural income. 

Price Limitations for Private Purchasers – MSP conveys a value message to advertise that if vendors don’t offer higher than MSP costs the farmer may not sell them his produce. In this manner, it goes about as an anchor or benchmark for agricultural produce. It guarantees the market costs won’t be radically lower than Minimum Support Price. 

Commercial Crops– MSP is utilized as an instrument to boost the creation of explicit food crops which is short in supply. MSP spurs farmers to develop commercial crops and expanded creation on a commercial basis. 

Purchasing Power Enhancement – MSP provides fixed amounts in framers’ hands which make them financially stable. It helps in upgrading the buying limit and updating the style of living of farmers and their families. 

Different Issues Related to Minimum Support Price 

Non-Relative Increment – This MSP is not being increased as per the expanded cost of creation. MSP has for sure fallen during 2014-17. 

Low Number of Beneficiaries – The advantages of this plan don’t arrive at all farmers and for all crops on the farm. Not all farmers have had the option to get the advantages of MSP due to the absence of awareness about MSP schemes. There are numerous locales of the nation like the north-eastern district where the execution of MSP schemes is week. 

Inadequate Storage Facility– MSP without adequate storage capacity has brought about immense heaping of stocks in the stockrooms. The stock has now become twofold the necessities under the plans of PDS, Buffer stock and so there is the requirement of more storage space for these agricultural produces. 

Market Bending – It misshapes the unrestricted economy by preferring some specific crops over different yields. 

Fiscal Pressure– Open-finished acquisition of paddy and wheat at MSPs is totally out of sync with market costs and leads to financial unbalance in the economy. 

Impact on Export – Hikes in MSP likewise antagonistically influence the export by making Indian products un-cutthroat particularly when worldwide market costs are lower. 

Natural Issue– MSP prompts non-logical farming practices whereby the soil, water is worried to a degree of depletion groundwater table and salinization of soil. 

Yield Variety– MSP influences the crop variety in India. With MSP editing designs get influenced as it prompts the creation of MSP upheld only those crops as it ensures returns. 

Alternative Options for MSP- 

Substitute Pay Models– Instead of depending on MSP alone, the public authority needs to investigate substitute models to support farmers. 

Value Deficiency Payment– To take care of the issue of MSP, Both NITI and Economic Survey suggest Price Deficiency Payment (PDP) in which the public authority pays the farmers the contrast between modular rate (the normal costs in major mandis) and theMinimum Support Price. A few states like Madhya Pradesh (Bhavantar Bhugtan Yojana), Haryana government (Bhavantar Bharapai Yojana) have dispatched value shortage financing plans. 

DBT Support– By moving from cost to pay support, all market-twisting info and yield appropriations can be imploded into the Pradhan Mantri Kisan Samman Nidhi or PM-KISAN scheme. 

Stock Should be Diversified– The public authority should stock adequate amounts of all fundamental food things not just rice and wheat, that empower powerful market mediation, with the premium of helpless buyers better dealt with through designated cash moves.

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