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Consider the following statements with respect to Minimum Support Price (MSP): 1. MSP is computed on the basis of the recommendations made by the Commission for Agricultural Costs and Prices (CACP). 2. Currently tea is covered under the MSP. 3. MSP for food grains is always kept necessarily higher than the market price of the grains. Which of the statements given above is/are correct?

Consider the following statements with respect to Minimum Support Price (MSP): 1. MSP is computed on the basis of the recommendations made by the Commission for Agricultural Costs and Prices (CACP). 2. Currently tea is covered under the MSP. 3. MSP for food grains is always kept necessarily higher than the market price of the grains. Which of the statements given above is/are correct? Correct Answer 1 only

The correct answer is Option 1, i.e 1 only.

  • Minimum Support Price (MSP) is a form of market intervention by the Government of India to insure agricultural producers against any sharp fall in farm prices.
  • The minimum support prices are announced by the Government of India at the beginning of the sowing season for certain crops on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP). Hence Statement 1 is Correct.
  • MSP is price fixed by the Government of India to protect the producer - farmers - against excessive fall in price during bumper production years.
  • The minimum support prices are a guaranteed price for their produce from the Government.
  • The major objectives are to support the farmers from distress sales and to procure food grains for public distribution.
  • In case the market price for the commodity falls below the announced minimum price due to bumper production and glut in the market, govt. agencies purchase the entire quantity offered by the farmers at the announced minimum price.
  • Minimum support prices are currently announced for 25 commodities including seven kinds of cereal (paddy, wheat, barley, jowar, bajra, maize and ragi); five pulses (gram, arhar/tur, moong, urad and lentil); eight oilseeds (groundnut, rapeseed/mustard, toria, soyabean, sunflower seed, sesamum, safflower seed, and niger seed); copra, raw cotton, raw jute, sugarcane and Virginia flu cured (VFC) tobacco. (Tea is not covered under MSP), Hence, Statement 2 is NOT Correct.
  • Procurement prices were always kept lower than Market Prices.
  • So preference of farmer was to sell in this manner – 1st: Market, 2nd: Government at Procurement Price, 3rd: Government at MSP. Hence Statement 3 is NOT Correct.

Related Questions

Commission for Agriculture Costs and Prices (CACP) submits its recommendation for MSPs of agricultural commodities in form of Price Policy Reports. Consider the following statements: 1. CACP is a statutory body formed under Agriculture Price Commission Act, 1962. 2. Currently MSP is devoid of any legal backing except for Sugarcane to some extent. 3. Before submitting a Price Policy Report for any crop, CACP also analyses demand and supply and the implications of MSP on consumers of that product along with the costs of production. Which among the following statements is/are incorrect?
Consider the following statements with reference to the Minimum Support Prices. 1. The MSP of six Rabi crops including Wheat, Chana, Masoor, Mustard and Safflower has been hiked in the range of 50 to 300 rupees. 2. The MSP is fixed on the recommendations of the Commission for Agricultural Costs and Prices (CACP). Which of the following statements given above is/are correct?
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