[Answered] To what extent has the MSP Policy achieved its intended purpose. Analyzing the limitations of the MSP policy, suggest remedial measures

Minimum Support Price (MSP) is a market intervention by the Government to protect farmers against any sharp fall in farm prices. It was first introduced in 1966-67. At present Government announces minimum support prices (MSPs) for 22 mandated crops and fair and remunerative price (FRP) for sugarcane. 

 The MSP policy was introduced with the following major objectives. 

• To assure remunerative and relatively stable price environment for the farmers. 
• Inducing farmers to increase production and thereby augment the availability of food grains. 

Achievements of the MSP policy. 

• Food security: After independence India had to import food grains (Under PL-480 agreement from USA) in to order to feed the population, Now India is not only self sufficient but also among top 10 agricultural produce exporters in the world. 
• Price Guarantee: MSP is announced in the pre sowing season that allows the farmer to take an informed decision, with guarantee of price. 
• Support to Public distribution system: More than 80 crore people receive food grains under the PDS system. Food Corporation of India (FCI) also maintains buffer stock which more than 3 times of the buffer norms fixed in 2015. 
• Price stabilization: There has been relative stability in the prices of crops under the  MSP regime, which protects the ordinary consumer along with farmers. 

However, there are challenges related to the MSP policy. 

• Distortion of Crop pattern toward paddy and wheat: The area under cultivation of rice and wheat from the time of the Green Revolution till recently increased from 30 million hectares to 44 million hectares (~50% increase) and 9 million hectares to 31 million hectares (~250% increase), respectively, while that of coarse cereals plunged from 37 million hectares to 25 million hectares (~33% increase). 
• Achieved Food security undermining Nutrition security: With the MSP farmers shifted from nutritional food crops to wheat and rice only, which reduced the availability of nutritional foods. 
• Unsustainable Farming practice: Almost 68% of Indian agriculture is rain-fed, which is suitable for drought resistant crops like millets, pulses etc. The MSP regime resulted cultivation of water intensive crops like Rice and Sugarcane which affected the water availability in the region. 
• Economically Unsustainable: The economic cost incurred by the Food Corporation of India(FCI) for procurement of rice and wheat is much higher than market price. Due to this, the FCI’s economic burden is touching Rs 3 lakh crore. 

• Loopholes in the Implementation of MSP Scheme: The Shanta Kumar Committee had stated that only 6% of the MSP could be received by the farmers, which directly means that 94% of the farmers in the country are deprived from the benefit of the MSP. 
• No MSP For Allied Sector: There is no minimum support price (MSP) for products of animal husbandry or fisheries and no procurement by the government. Allied sector has the potential to raise farmer’s income and the target of doubling of farmers income. 

To address these challenges following measure could be taken 

• Inclusion of more crops in MSP regime: Including more crops under the MSP regime, would promote crop diversification. Which will improve  availability of nutritional foods and sustainability of agriculture in India. 
• Announcing a band of MSP: Rather than a fixed price, a band of price for each crop with a maximum and a minimum price depending on harvest conditions (i.e. higher price in a bad harvest and lower price in a good harvest year in general) will have its price set in the band. In this way MSP will be more in sync with the market, reducing economic burden of the Government. 
• Decentralized Implementation: MSP scheme could be implemented Effectively by decentralising the implementing agencies under the constitutionally mandated supervision of panchayats. Thereby increasing the reach of MSP.  

MSP policy has some positive impact on the farming sector in India but there is a need to rethink the MSP regime in view of its adverse effects.