Consider the following statements: In the case of all cereals, pulse

Consider the following statements:

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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 ?

1 only

2 only

Both 1 and 2

Neither 1 nor 2

Answer is Right!

Answer is Wrong!

This question was previously asked in

UPSC IAS – 2020

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The question asks about the correctness of two statements regarding the Minimum Support Price (MSP) regime in India.

– Statement 1: Procurement at MSP is not unlimited for all cereals, pulses, and oilseeds, or in all States/UTs. While MSP is declared for many crops, effective procurement at MSP is strong primarily for wheat and rice in certain states, mainly to meet the requirements of the Public Distribution System (PDS) and buffer stocks. Procurement for other crops is often limited or handled through different schemes like Price Support Scheme (PSS) or Price Deficiency Payment Scheme (PDPS), and is not guaranteed unlimited procurement from all farmers nationwide.
– Statement 2: MSP is fixed as a *minimum* price to protect farmers from excessive price falls. Market prices are determined by demand and supply forces and can rise significantly above the MSP, especially during periods of high demand or supply shortages. Fixing MSP at a level that the market price will *never* exceed is contrary to the purpose of MSP as a floor price.

The government’s procurement operations primarily focus on food grains like wheat and rice through agencies like the Food Corporation of India (FCI). For other crops, procurement operations are often limited in scale and geographical reach, and market prices frequently fluctuate above and below the MSP.

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