Economics

Write notes on: Minimum Support Price.


SOLUTION

Minimum Support Price (MSP) -
1:This is the pre-announced price at which the government purchases food grains particularly, wheat and rice from the farmers in order to create a buffer stock. 

2:This price is announced by the government every year before the sowing season to give incentive to the farmers to raise the production of the desired crop. 

3:The rising MSPs have raised the maintenance cost of procuring food grains by the government as well as induced farmers to divert land from production of coarse grains to the production of these crops.

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