Niti Aayog: MSP can only ensure a stable price, not the best price
Ramesh Chand, a member of Niti Aayog, said on Friday that the minimum support price (MSP) for crops can guarantee stable prices, but not always the best prices. The best prices can only be guaranteed by fair competition on the market, he said. He was speaking at a meeting about farming that was put on by Rural Voice, a digital media platform.
Chand said that farmers want MSP to be a legal right so they can get the best price for their crops and protect themselves from price changes. This is what farmer groups want.
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‘I don’t think that MSP is always the best price. The price is stable, but it’s not the best price. Competition is what leads to the best price. Farmers can get the best price if there is competition on the market’ he said.
MSP is set by the government for 22 crops. It buys wheat and rice to give out through ration shops as part of different welfare programs. Oilseeds and pulses are also bought in small amounts.
Chand, who is also on the government-appointed MSP committee, said that people shouldn’t depend too much on the MSP and that farmers should take advantage of market opportunities.
He also said that the most growth is happening in the areas where the government is least involved in setting prices.
He used the fast and steady growth of related industries like dairy, fishing, and horticulture to make his point.
Chand said, ‘We shouldn’t think that the MSP system could give us the best price in every situation.’
Chand said that while the MSP has its place in certain situations, it also makes it hard for farmers to be entrepreneurial and deal with changes in the market.
Chand said that making MSP a legal right will have a number of effects and that three prices will have to be taken into account: MSP, the fair market price, and the actual market price.
If the fair market price is higher than the MSP, it would work to make the support price legal.
But if the fair market price is lower than the MSP, businesspeople will stop selling and the government will have a budget problem.
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In July of this year, the government did what it said it would do when it took back three controversial farm laws that farmers had been protesting against for more than a year. It set up a committee to look into the MSP.
The committee is looking into how to make the MSP system work better and be more open. It will also look into other things, such as giving the Commission for Agricultural Costs and Prices (CACP), which sets the MSP of crops, more freedom.