CA Foundation · Business Economics · Indian Economy
The Minimum Support Price (MSP) system for farm produce in India is mainly intended to:
MSP is a price floor announced by the government on the advice of CACP. It guarantees farmers a remunerative minimum price and protects them from steep price falls. It is not a ceiling on consumer prices, a tax on farm income, or an export control.
- AGuarantee farmers a remunerative floor price and protect them from sharp price fallsCorrect
- BFix the maximum price consumers can be charged for foodgrains
- CTax agricultural income of large farmers
- DControl the export of all agricultural commodities
Explanation
MSP is a price floor announced by the Government on the recommendation of the Commission for Agricultural Costs and Prices (CACP). It assures farmers a minimum price and supports production incentives. A maximum consumer price is a price ceiling, which is a different tool.
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