Consider the following statements:

1. In the case of all cereals, pulses and oil seeds, the procurement at Minimum Support Prices (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?

1. 1 only
2. 2 only
3. Both 1 and 2
4. Neither 1 nor 2

Explanation

Statement is correct

• The procurement at Minimum Support Prices (MSP) is not unlimited. The government typically purchase certain quantities based on its needs and budgetary constraints. This applies differently for cereals, pulses, and oilseeds.
• For example, the government’s procurement of pulses and oilseeds under the scheme has gradually increased. Initially, it was mandated to buy only 25% of production. This limit was later raised to 40%. Most recently, for the 2023-24 season, the cap was entirely removed for arhar, urad, and masoor.

Statement 2 is incorrect

• The MSP is a price floor set by the government to ensure farmers are protected from any sharp fall in market prices, but it is not true that the market price will “never rise” above the MSP. Market prices can and do fluctuate above the MSP based on supply and demand dynamics.
• The MSP is fixed by the Central government on the recommendations of the Commission for Agricultural Costs and Prices (CACP).

Answer: (d) Neither 1 nor 2; Difficulty Level: Easy