Government Must Subsidise Agriculture But In What Way?

In India, the Commission for Agricultural Costs and Prices has recommended Minimum Support Prices (MSP) for 23 agricultural commodities. On the basis of that recommendation, the central government announces MSPs at the beginning of the sowing seasons.

- Kishore Kumar Biswas

Minimum Support Price

In India, the Commission for Agricultural Costs and Prices has recommended Minimum Support Prices (MSP) for 23 agricultural commodities. On the basis of that recommendation, the central government announces MSPs at the beginning of the sowing seasons.

The MSP is a form of market intervention by the government which guarantees the highest prices at which the government is ready to buy the entire farm production of certain crops (23 at present) direct from the farmers. The most important purpose of this policy is to protect the agricultural sector from sudden fall of prices of agro-products during over production periods. But if the market prices are higher than MSPs, the farmers can sell their products in the market. It is expected that introduction of proper MSP rates will substantially minimise agrarian distress.