Daily answer writing assignment

Answer Writing Assignment(23-06-2020)

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What do you mean by Minimum Support Price (MSP)? How will MSP rescue the farmers from the low-income traps? (150 words) 

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  • Minimum support Price is a form of market intervention by the government to insure the produce against sharp fall in farm price.
    MSP is the price fixed by the government of India to protect the producer from excessive fall in price during bumper production years.

    Different ways in which MSP rescue farmers from low income traps are,
    *Covers production costs
    MSP mechanism is designed in such a way that it take into account production cost. Thus the farmers will get atleast basic costs and certain profits can be expected too.
    *Protecting from middlemen
    Farmers residing in remote areas and had to relay on middleman to bye their produce. Middile men will buy it at a low cost cell it at higher price. Producers left in poverty. Arrival of msp farmers can directly sell their produce to goverment and earn profit.
    *Crop protection
    MSP for a particular crop is announced at sowing period so as to inform producers about market condition. This will ensure the farmers the minimum price they can expect for a particular crop.
    * Prevents distress sale
    NABARD’s all india rural financial inclusion survey 2016 reveals that the average monthly income of farmer is less than 9000 from all sources. With this they have buy inputs for next cropping season. If they are forced to distress sale of produce at throw away price they can’t afford high breed variety seed,pesticides,fertilisers tractor rent etc this will affect decrease in their income in next cycle. MSP prevent this.
    *Helped to make informed decision
    Govt announce MSP for nearly 23 crops including oil seeds,pulses,cerels,crash crops. So farmers can take decision about which crop should be sow to get maximum economic benefit within his limitations like farm size,climate ,irragation facilities.

    *Acts as a bench mark for private buyers
    MSP provide price signals to market that if the merchents do not offer higher price than MSP the farmers may not sell their produce.
    MSP cannot always guaretee a higher market price but ensures the market price will not drastically lower than MSP.

    Further Amplify the positive effects of MSP,government has two initiatives in 2008
    1.budget 2018-19 announces to keep MSP of 1.5 percent of production cost
    2. Pradhanmathri annadatha aay samrakshan yojana to revamp the MSP procurement system.

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