Institutional Arrangements to Enforce the Minimum Support Price (MSP) Policy Effectively in India: A Case Study of Wheat and Paddy Production in Punjab

Abstract

The paper tries to examine the institutional arrangements to enforce the minimum support price (MSP) in India with a special reference to a highly agricultural-producing state, which is also known as the food bowl of India. The current study is based on the Punjab state which is an agriculturally rich state, here, paddy and wheat farmers suffered low losses as compared to other crop cultivators, but they are not separate from losses. These institutional arrangements to enforce the MSP policy examined by studying cost of Production, FHP, MSP, and crop procurement by the government agencies and their benefited farmers of wheat and paddy. The study calculated the percent change in over the period of 2012-13 to 2020-21 of costs data from the Directorate of Economics & Statistics (DES), and this study analysed the procurement data published by the Food Corporation of India (FCI) and the Ministry of Agriculture and Farmers Welfare, Government of India. The percentage analysis is used as a statistical tool for this research, to access the effectiveness of MSP by its institutional arrangements that enforce the MSP effectively. The institutional arrangements to enforcement the MSP of wheat and paddy is found to be effective in Punjab. The MSP seeks to guarantee fair prices for the growers that promote greater investment and output of the produce. The result of the paper revealed that within the time being the cost of production, cost of cultivation, FHP, MSP, and government procurement of wheat and paddy is increasing, whereas the number of benefited farmers has not significantly increased. The findings of this research unravel that wheat and paddy growers of Punjab are getting supported largely due to effective procurement by the government at the MSP. Overall, at the state of Punjab the procurement of wheat and paddy by the government agencies such as FCI and state agencies is satisfactory, and conclude that the institutional arrangements for wheat and paddy procurement at MSP in Punjab is effective in nature.