← All questionsGS3 · 2018 · Agriculture ·MSP and the Farm Income Trap
QUESTION 3
GS3
10 marks

What do you mean by Minimum Support Price (MSP)? How will MSP rescue the farmers from the low income trap?

WRITE IN
7 min
150 words

What the examiner wants

Define MSP and assess how far it can lift farmers out of low incomes.

Explain + ExamineMake clear how and why it happens: causes, process, and an example for each point. Go into the details, test each point against evidence, and conclude on what it shows.

Demand-wise check

  1. 1Meaning: price announced by the Centre on CACP advice for 22 mandated crops (plus FRP for sugarcane), acting as a floor≈30 words
  2. 2Rescue role: price assurance, investment in inputs, crop choice signals, procurement for PDS, 1.5 times cost formula (Budget 2018-19)≈30 words
  3. 3Limits: effective mainly for rice and wheat in a few states; low awareness; skews cropping to paddy; small farmers often sell to traders≈30 words
  4. 4Beyond MSP: PM-AASHA (price deficiency payments), e-NAM, FPOs, income support (PM-KISAN), diversification≈30 words

Open in about 20 words and close in about 20.

Answer plan

Definition and mechanismHow it raises incomeLimitsComplementary measuresConclusion

Where marks usually go

  • Assuming MSP reaches all farmers
  • Not explaining which cost base (A2+FL vs C2) is used

Draw this

  • Flow: CACP → Cabinet announcement → procurement (FCI/states) → farmer income

Value addition

  • CommitteeShanta Kumar Committee (2015), citing NSSO data, said only about 6% of farm households sell at MSP to procurement agencies.High Level Committee on FCI, 2015
  • CommitteeSwaminathan Commission (National Commission on Farmers) recommended MSP at least 50% above the weighted average cost (C2).NCF, 2006

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