The MSPs are fixed at incentive level, to fulfil the following purpose

The MSPs are fixed at incentive level, to fulfil the following purposes :

1. to induce less investment by farmers in the farm sector.
2. to motivate farmers to adopt improved crop production technologies.
3. to enhance production and thereby farmers’ income.

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1 and 2 only

2 and 3 only

1 and 3 only

1, 2 and 3

Answer is Right!

Answer is Wrong!

This question was previously asked in

UPSC SO-Steno – 2018

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Statement 1 is incorrect. Minimum Support Prices (MSPs) are fixed at incentive levels specifically to *encourage* farmers to invest more in the farm sector by assuring them a minimum price for their produce, thereby reducing market risk. Statements 2 and 3 are correct. By ensuring a floor price, MSPs reduce the risk associated with adopting new technologies (like better seeds, fertilizers) that require higher initial investment. This motivates farmers to modernize agriculture, leading to increased production and potentially higher income, especially for farmers cultivating MSP-covered crops who can sell their produce at the guaranteed price.

MSPs aim to provide a price guarantee to farmers, reduce income volatility, encourage production of certain crops, and incentivize investment and technology adoption.

MSPs are announced by the Government of India for certain crops based on recommendations from the Commission for Agricultural Costs and Prices (CACP). While intended to support farmers, the MSP system has also been criticized for creating market distortions, encouraging the production of specific crops (like rice and wheat) over others, impacting soil health, and contributing to procurement and storage challenges.

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