Consider the following statements Minimum Support Prices MSP for food grains is estimated by the Foo...........

Economic Affairs Agricultural Marketing and Prices

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Consider the following statements:

Minimum Support Prices (MSP) for food grains is estimated by the Food Corporation of India (FCI).
MSP for food grains is always greater than the market price of the grains.

Which of the statements given above is/are correct?

1 only

2 only

Both

None

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Explanation:

MSP is calculated by the Commission on Agricultural Costs and Prices (CACP). MSP may be higher or lower than market prices depending upon the market situation at a particular time.

Statement (1) is incorrect: 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).
Statement (2) is incorrect: MSP may be higher or lower than market prices depending upon the market situation at a particular time.