NISM Certifications · NISM-Series-XV: Research Analyst · Fundamental Analysis of Commodities
For agricultural commodities in India, the Minimum Support Price (MSP) is best described as:
MSP is the price at which the government stands ready to procure notified crops from farmers, serving as a floor-type support for farm prices. It is not a price ceiling for consumers, a futures settlement price or a tax on trades.
- AA price at which the government undertakes to purchase notified crops, acting as a floor-type support for farmersCorrect
- BA maximum price that traders can charge consumers
- CThe daily settlement price of agricultural futures contracts
- DA tax levied on agricultural commodity transactions
Explanation
MSP is announced by the government on the basis of recommendations by the Commission for Agricultural Costs and Prices for notified crops, and procurement at that price provides a support level for farmers. It is not a price ceiling, a futures settlement price or a tax.
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