Minimum Support Prices in India: Theory vs Reality

This paper has analysed farmer's awareness about minimum support price (MSP) scheme of crops grown by them using a nationally representative data collected by NSSO (70^th round). It has also explored the linkage between farmers’ awareness about MSP and decision-making on diversification of crop production. The study has found that more than 75 per cent of households were not aware about MSP of crops grown by them. The awareness was high only in the case of rice and wheat, that too only in a few states like Punjab, Haryana, and Chhattisgarh. Awareness about MSP of pulse crops was found even less (<10% for most crops), which is a cause of worry. Even among MSP-aware farmers, nearly 25 per cent reported not selling the produce at MSP because of unavailability of procurement agencies at approachable distance. The study has recommended to strengthen the procurement network within easy access of farmers. The study, however, has found no empirical evidence to support the general belief that MSP leads to crop specialization as procurement is biased towards wheat and rice.