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Day 44 – Q 1. What in your opinion are the deficiencies in India’s MSP regime? Analyse.

1. What in your opinion are the deficiencies in India’s MSP regime? Analyse.     

आपकी राय में भारत के MSP प्रणाली में क्या कमियां हैं? विश्लेषण करें।


The minimum support prices (MSP) are announced by the Government of India at the beginning of the sowing season for certain crops based on the recommendations of CACP.

The idea behind MSP is to

  • Give guaranteed price and assured market to the farmers and protect them from the price fluctuations and market imperfections.
  • The guaranteed price and assured market are expected to encourage higher investment and in adoption of modern farming practices.
  • Further, with the globalization resulting in freer trade in agricultural commodities, it is very important to protect the farmers and their interest.


Deficiencies in India’s MSP regime

  • Incentivised cereal centric production has distorted cropping pattern affecting crop diversification. Situation results in lower production of other crops. Example: import of pulses.
  • Un-sustained agricultural practices:  Cultivation of water intensive crops like Rice-Wheat in unsuitable agro-climatic conditions has resulted in over-exploitation of ground water.
  • Though fixed for 23 crops, in practice, the remaining 20 agro commodities do not derive any benefit.
  • It is criticised that MSP calculation formula do not really reflect actual cost of production.
  • Challenges relating to information dissemination: NSSO study has pointed out that it has mostly benefited large farmers while 70% of farmers remain unaware about MSP.
  • MSP has turned out as a Political tool. While Global commodity prices are falling, In India downward revision under MSP policy is inconceivable.
  • Averaging out the cost of production in different agro-climatic conditions, varied yields and cost indices of 26 states is a questionable exercise for the determination of MSP.
  • Inadequate infrastructure to store procured grains results into wastage.
  • MSP Procurement is almost nil in eastern states.

Suggestions to improve:

  • First and foremost, the awareness among the farmers needs to be increased and the information should be timely disseminated till the lowest level so that the knowledge would increase the bargaining power of the farmers.
  • Delays in MSP payments have negative effects on the framers which needs to be corrected and timely payment should be ensured.
  • As intended by the policy makers, MSP should be announced well in advance of the sowing season so as to enable the farmers to plan their cropping.
  • Improved facilities at procurement centres, such as drying yards, weighing bridges etc. should be provided to the farmers. More godowns should be set up and maintained properly for better storage and reduction of wastage.
  • There should be meaningful consultations with the State Government, both on the methodology of computation of MSP as well as on the implementation mechanism.
  • The criteria for fixing MSP should be current year’s data and based on more meaningful criteria rather than the historical costs.
  • The small and marginal farmers can be provided with some exemption in Fair Average Quality (FAQ) norms to provide them with a source of income.
  • The Procurement Centers should be in the village itself to avoid transportation costs.
  • The MSP scheme requires a complete overhaul in those States where the impact of the scheme ranges from ‘nil’ to ‘at-best marginal’ to ensure that MSP as an important instrument of the Government’s agricultural price policy is not undermined. In fact, in a few selected States in Eastern India (for instance, Assam and West Bengal), the poor impact of the scheme may be judged by the fact that none of the selected farmers were even aware of the existence of such a Scheme.


Along with MSP we need a robust procurement system, appropriate foreign trade (export/import) policy and tariff (Customs duty) policy in a way that will protect domestic growers without compromising the interests of consumers with simultaneous focus on crop-neutral initiatives that seek to build lasting assets as well as scientific post-harvest systems to help farmers.

Best answer: Sk

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