What is MSP and why Farmers' Problems Might not be Resolved by it ||

Описание: MSP FARMERS :The government sets the Minimum Support Price (MSP) to purchase crops from farmers, providing a safety net during market fluctuations or when prices fall. In 2020-21, farmers' groups withdrew protests at Delhi's borders after the government assured MSP. While MSP applies to all crops, it primarily benefits rice and wheat due to the government's storage capacity for these grains, which supply the public distribution system. MSP is ensured through three methods: requiring buyers to pay MSP, government agencies purchasing crops at MSP, or through Price Deficiency Payments (PDP). However, mandating the government to buy all MSP-covered crops may not be beneficial, leading to resource wastage, skewed crop patterns, unfair treatment, legal issues, and delayed payments due to storage constraints.Agro economist Ashok Gulati believes that making MSP a legal obligation could lead to complexities. If the supply of a commodity surpasses demand and prices can't drop below MSP, there could be challenges in finding buyers. In a typical market economy, surplus leads to price reduction until equilibrium is reached. However, if prices are not allowed to fall, the government may need to purchase excess stock, which is not feasible. Economists prefer providing income support to farmers rather than fixing prices. This involves transferring a set amount of money annually to farmers' bank accounts, benefiting all farmers equally without market distortions. While a legal MSP guarantee may not be feasible, experts doubt any government will abolish MSP due to strong farmer support.
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