Sandeep BadadAIR 82 · CSE 2025 · 204 wordsTheir whole copy
Opening · a definition
MSP is a support price which is a floor at which the government promises to procure.
Recent farm protests demanding legalisation have triggered the debate around its efficiency and sustainability.
Body · points
MSP and fiscal insustainability:
① Huge expenditure on exchequer already strained by input subsidies. [→] 22% goes to intrest payment.
② Revenue deficit & fiscal deficit above FRBM limit (n 2% = RD).
③ Crowding out effect.
④ Dries funds for infrastucture development.
Economically inefficient system of Agriculture
① Promote rice-wheat bias ↳ 80% procurement from Punjab, Haryana & Western U.P.
② Distort cropping pattern further
③ Excess use of nutrients → soil degrades e.g. Haryana - salinity
④ Leads to excess groundwater extraction e.g. 60% used for irrigation
⑤ Distorts market → crop based on higher MSP not on demand ↳ private food sector becomes public sector enterprise
Alternatives
① Guranteed procurement in case of price fall rather than.
② PM AASHA → Price deficiency payment system, private procurement system.
③ Revise formula to C2 as per Ms. Swaminathan.
④ Shantakumar committee highlighted
- Comparison like system.
⑤ Promote contract farming to ensure better renumeration.
Close · a summary
Farmer income can be doubled by twin policies of market access and market information besides production related measures.