Agricultural Marketing and Prices

Economic Affairs

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Indian Economy - Understanding the basics of Indian economic system

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Consider the following statements

In the case of all cereals, pulses and oil-seeds, the procurement at Minimum Support Price (MSP) is unlimited in any State/UT of India.
In the case of cereals and pulses, the MSP is fixed in any State/UT at a level to which the market price will never rise.

Which of the statements given above is/are correct?

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UPSC CSP Previous Year Paper (2020)

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1 only

2 only

Both 1 and 2

Neither 1 nor 2

Explanation:

Under the new PM-AASHA scheme, the existing Price Support Scheme (PSS) will continue for pulses and copra, with Central agencies — including the NAFED and the Food Corporation of India physically procuring the produce whenever the market rates fall below MSP, up to a maximum limit of 25% of the total harvest. While procurement is open-ended, it is not unlimited since our buffer stock is limited.
The Centre currently fixes MSPs for 23 farm commodities based on the Commission for Agricultural Costs and Prices (CACP) recommendations. MSP is only an indicative price, and Market price can rise way above or way below MSP given the situation.

Hence option 4th is correct.