The ecosystem of minimum support price for agricultural produce in India

Abstract

“Agriculture is the backbone of Indian economy” said by Mahatma Gandhi eight decades ago, even today still the situation is same by contributing one fifth portion to GDP by agriculture and allied activities and accounts for an employment of 52 percent of Indian population. Agriculture as one of the oldest professions on the earth continues to play vital role in the Indian economy. Contribution by agriculture to GDP has been decreased from 44.5 percent in 1970 to 14% to date. A decrease in a growth trend has negative impact on the overall sector growth of the nation. In order to overcome from this situation, it is important to re-energize the agriculture sector. Minimum Support Price is the scheme which is having strong potential of boosting agriculture sector by contributing to the Farmers’ Income, Food Security and Monitoring of Price Fluctuations of agricultural produces etc. The study made an attempt to explore the ecosystem of price support scheme by consideration of price fixation methodology, factors considered while fixing the prices and objectives set forth by the CACP (Commission for Agricultural Costs and Prices) etc. Also, the paper employed Compound Annual Growth Rate for analysing the growth trend of MSP fixed for agricultural produces over the years and percentage of changes taken place in order to cover the cost of production of farm harvest.