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Panel on MSP, natural farming setup

GS Paper 3

Syllabus: Issues related to direct and indirect farm subsidies and minimum support prices


Source: The Hindu

Context: The government constituted a committee headed by former Union Agriculture Secretary Sanjay Agrawal to look into the issues of minimum support price (MSP)

  • Background: The government had announced the decision to repeal the three farm laws and said it will constitute a  committee to promote zero budget-based farming, change crop patterns keeping in mind the changing needs of the country and make MSP more effective and transparent.
  • Members: Committee will consist of representatives of the Central and State governments, farmers, agricultural scientists and agricultural economists.

Objectives of the committee:

  • On agricultural marketing system: It will work for Agri marketing as per the changing requirements of the country to ensure higher value to the farmers through remunerative prices of their produce by taking advantage of the domestic output and export.
  • On natural farming: It will suggest programmes and schemes for value chain development, protocol validation and research for future needs and support for area expansion under the Indian Natural Farming System.
  • On crop diversification: It will look into the mapping of existing cropping patterns of agro-ecological zones of producer and consumer States.
  • Review and suggestion on micro irrigation scheme


Evolution of MSP regime in India:

Need for MSP:

  • Support farmers from distress sales.
  • To procure food grains for public distribution
  • To safeguard farmers from market price fluctuations.
  • Maintain a healthy supply of food grains in the market thereby helping in the fight against hunger.
  • Theguaranteed price for the crops and assured markets encourage higher investment and adoption of modern farming practices. 


Related News

As per a study by the State Bank of India, only 50% of the intended beneficiaries of the farm loan waivers announced since 2014 have received actual debt write-off benefits.

    • Reasons for low reach: Rejection of claims by the state government, change in policies and government
    • The average income of farmers grew only by 1.3-1.7 times during 2017-18 and 2021-22.
    • Kisan Credit card and MSP have been instrumental in benefiting farmers.
    • SHG have around 10% NPA across India.


Insta Links

On-farm laws repeal


Practice Questions

Q. Tracing the evolution of the Minimum Support Price regime in India, discuss how MSP has caused – Concentration of markets, Negative externalities, and High transaction costs. What steps can be taken to address these to ensure better remuneration to farmers and stimulate the rural economy? (15M)


Q .Consider the following statements: (UPSC CSE 2020)

    1. In the case of all cereals, pulses and oil seeds, the procurement at a Minimum Support Price (MSP) is unlimited in any State/UT of India.
    2. In the case of cereals and pulses, the MSP is fixed in any State/UT at a level to which the market price will never rise.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Answer: D

Procurement is not unlimited since buffer stock is limited. Market price has no link with MSP.