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69

Question 69

Consider the following statements:
1. 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.
2. 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?

AOptions

A
A) 1 only
B
B) 2 only
C
C) Both 1 and 2
D
D) Neither 1 nor 2

BSolution

Let's examine the statements concerning Minimum Support Price (MSP) procurement in India:

  • 1. 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. This statement is incorrect. While procurement of certain cereals (like wheat and paddy) is significant and often referred to as open-ended in major producing states, it is not truly 'unlimited' for all crops (including pulses and oilseeds) or in all states/UTs. For pulses and oilseeds, procurement under schemes like Price Support Scheme (PSS) is quantity-limited and often undertaken when market prices fall below MSP. Operational limitations, quality specifications, and logistical challenges also mean that procurement is not universally unlimited.

  • 2. 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. This statement is incorrect. The Minimum Support Price (MSP) is a floor price, a minimum guaranteed price for farmers. Its purpose is to provide a safety net and protect farmers from distress sales during times of abundant harvest or price crashes. Market prices can, and often do, rise above the MSP, especially during periods of high demand, lean supply, or when global prices are high. MSP is a 'minimum' support, not a price ceiling.

Therefore, neither statement 1 nor statement 2 is correct.

Diagram for Q69

CStrategy

For questions on agricultural policies like MSP, understand the precise nature of the policy, its objectives, and its practical implementation. Be cautious of extreme or absolute terms like 'unlimited' or 'never rise', as such statements are often incorrect in complex economic realities.

DSyllabus Analysis

This question falls under the Indian Economy, specifically focusing on agriculture, agricultural policies (like MSP), and food security.

EQuestion Analysis

Medium. It requires a detailed understanding of the nuances and limitations of MSP implementation beyond its basic definition.