In India, the Commission for Agricultural Costs and Prices recommends the minimum support prices (MSP) for agricultural commodities (currently for 23 products). On the basis of the recommendation, the Government of India announces the MSPs at the beginning of the sowing seasons. The MSP is a form of market intervention by the government which guarantees highest prices at which the government is ready to buy the entire products of certain crops directly from the farmers.
The most important purpose of it is to protect them from a sudden fall of prices of agro-products, particularly, in the period of bumper products. But if the market prices are higher than MSP the farmers can sell their products in the market. It is expected that introduction of proper MSP will minimise distress sale of the farmers and help procuring grains for the public distribution system.
The Commission considers a lot of factors to decide the MSPs. These factors vary among the regions. The cost of cultivations per hectare and quintal and structure of cost, prices of inputs and their changes, expected prices of the products in the internal markets, area of cultivation, amounts of import and export, level of stocks, total and per capita consumption, international prices and its changes, derivative prices of some of the goods like sugar cotton, edible oil and jute and cost of marketing etc. are important factors to determine the MSPs.
Increase in MSP by 50%
The union government has decided to increase the MSP, which will cover all cost of cultivations plus 50% of that. But it is reported that only paid –out cost and cost of engaged family labour is going to be considered for determining total cost. A section think that if the imputed rental value of farmers’ land is not added the total cost computation will remain undervalued. The NITI Ayog has undertaken a thorough study on MSP that has pointed out a lot of weaknesses of the MSP system. Therefore, one has to think the of the steps to be taken to have the benefits of the MSP.
This story is from the May 1-15, 2018 edition of BUSINESS ECONOMICS.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the May 1-15, 2018 edition of BUSINESS ECONOMICS.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber? Sign In
A new chapter in Singapore's Leadership: continuity and change
The departure of Prime Minister Lee Hsien Loong marks the beginning of a new era in Singapore, as Lawrence Wong ascends to the post of the country’s fourth Prime Minister.
Disabled children: Education and rehabilitation
Child disability is, in fact, a serious and challenging problem of the world.
India's 2024 Elections: Is it a fight between a macro & micro view of development?
The seven phase massive election process in the largest democracy of the world is on; and the churn throws up hope as well as despair.
Empowering India's workforce: launch of comprehensive skill training programme
Srihari Global IISD Foundation, in collaboration with Birla Open Minds and SAHAJ Retail Private Limited, has launched a groundbreaking skill training program aimed at enhancing employment opportunities and fostering career growth across India.
DVC achieves record power generation in its 75-year journey
The Damodar Valley Corporation (DVC) has accomplished a significant milestone by generating 43.32 billion units of electricity during the fiscal year 2022-23.
"Sticky" inflation is still a global worry!
While major world economies have successfully tackled inflation over the last six months by bringing retail inflation (the monthly consumer price index-based inflation) close to the central bank target rates of 2% with and emerging economies including India’s Reserve Bank of India have achieved some measure of success, all is not well yet.
Emerging alarming trends in India's financial sector
The onset of the new financial year FY25, commencing on April 1, 2024, does not promise any relief from the economic challenges persisting since the previous fiscal year. In recent months, various banks and financial institutions in India, including Bank of Baroda, HDFC Bank, Kotak Mahindra Bank, PayTM, IIFL, JM Financial, and Paisa Lo, have been making headlines for all the wrong reasons.
Economic insights from China
Economic indicators released by Chinese authorities, media outlets, and researchers suggest a recent downturn in China’s economic fundamentals.
Rubber planters confront challenges of declining prices, labour shortages, and erratic monsoons
Natural rubber (NR) stands as a crucial plantation commodity in India.
Is the Indian Tea Industry at a crossroads?
The Indian tea industry marks a significant milestone this year as it celebrates two centuries of journey since its inception.