MINIMUM SUPPORT PRICE

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Minimum Support Price (MSP) in India

• GS2 International Relations

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MINIMUM SUPPORT PRICE

• In this informative piece, Rishabh explains the
  new update on the Minimum Support Price. Eminent
  instructor Vikas Gupta has carefully examined
  this article to make sure it is suitable for
  posting on the Plutus IAS website's current
  affairs space. 

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Minimum Support Price (MSP) in India

• Introduction to MSP
• MSP is a government policy ensuring a minimum
  guaranteed price for agricultural crops,
  calculated at one-and-a-half times the cost of
  production.
• Objectives of MSP
• Price Stabilization MSP provides price stability
  and income security for farmers.
• Crop Diversity Encourages diversification in
  crop cultivation and sustainability.
• Crops Covered by MSP
• Mandated Crops MSP recommendations for 22 crops,
  including 14 kharif, 6 Rabi, and 2 commercial
  crops.
• Sugarcane Fair and Remunerative Price (FRP) for
  sugarcane.
• Derivative MSPs Some crops, e.g., toria and
  de-husked coconut, based on related crop MSPs.

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MSP and its Effects on the Economy

• Enhancing Farmers' Income Provides financial
  safety net for farmers.
• Income Redistribution Can reduce income
  inequality between rural and urban areas.
• Food Security Ensures a stable supply of
  essential agricultural products.
• Inflationary Pressure May contribute to
  inflation due to increased procurement costs.
• Fiscal Burden Strains government finances and
  impacts fiscal targets.
• Trade Balance and Exports May affect export
  competitiveness and trade balances.
• Distorted Crop Selection Farmers may
  over-prioritize MSP crops, neglecting others.

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• Supply Chain Efficiency Strains storage and
  distribution systems.
• Market Distortions Could discourage private
  investment in agriculture due to market
  uncertainties.
• Policies and Regulations Requires government
  intervention, influencing market dynamics.
• Rural-Urban Linkages Influences rural-urban
  migration patterns and urban development.

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Commission for Agricultural Cost Prices (CACP)

• Role of CACP
• Proposes MSPs for Kharif and Rabi crops to the
  Cabinet Committee on Economic Affairs (CCEA).
• Objective
• Encourages modern technology adoption, resource
  utilization, and productivity among farmers.
• Note
• Recommendations by CACP are not binding on the
  government.

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