UPSC 2018 GS-III · 10 marks · 150 words

What do you mean by Minimum Support Price (MSP)? How will MSP rescue the farmers from the low-income trap?

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Definition: a pre-announced floor price at which government agencies procure, recommended by CACP for 22 mandated crops plus fair and remunerative price for sugarcane
Cost concepts A2, A2+FL and C2; the 2018-19 announcement of 1.5 times A2+FL and the Swaminathan Commission's C2 recommendation
How it helps: price-risk insurance, a benchmark that lifts open-market prices, an incentive to invest in inputs
Why it under-delivers: Shanta Kumar Committee found only about 6% of farmers sell at MSP; procurement concentrated in wheat and paddy, Punjab-Haryana-MP
Distortions and alternatives: groundwater depletion, cereal bias, PDSS and price-deficiency payments, PM-AASHA

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What do you mean by Minimum Support Price (MSP)? How will MSP rescue the farmers from the low-income trap?

What a top answer must contain

Now write it, and find out what you actually scored

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