The full form of MSP is Minimum Support Price.
Understanding Minimum Support Price (MSP)
The Minimum Support Price (MSP) is a crucial form of market intervention employed by the Government of India. Its primary objective is to safeguard agricultural producers from significant drops in farm prices, ensuring they receive a fair return for their produce.
Key Aspects of MSP:
- Market Intervention: The government actively participates in the agricultural market to stabilize prices.
- Price Protection: MSP acts as a safety net, protecting farmers from distress sales during periods of overproduction or market volatility.
- Guaranteed Price: The government announces MSPs for various crops before the sowing season, assuring farmers a minimum price for their harvest.
Example
For instance, if the market price of wheat falls below the MSP set by the government, the government agencies purchase wheat from farmers at the MSP. This prevents farmers from suffering losses and encourages continued agricultural production.
