UPSC Prelims 2020 Question:

Consider the following statements

1. In the case of all cereals, pulses and oil-seeds, the procurement at 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?

Explanation:

• The Department of Agriculture and Cooperation, Ministry Of Agriculture And Farmers' Welfare, declares Minimum Support Prices (MSP) for 22 mandated crops, and Fair and Remunerative Price (FRP) for Sugarcane. It is based on the recommendations of the Commission for Agricultural Costs and Prices (CACP).
  
  
• Effective MSP linked procurement occurs primarily for three crops, namely wheat, rice, and cotton, and only in a few states. There are procurement constraints, both crop and state-wise, which prevent farmers from benefiting from any increase in MSP. So, statement 1 is not correct.
  
  
• MSP is calculated on the basis of market prices, cost of cultivation and production and  productivity of crops. It is uniformly determined for the whole of country. So, statement 2 is not correct.
  
  

Therefore, option (4) is the correct answer.

Subject: Economics | Agriculture and Food Management