describe the negative effect of increase in minimum support price of food grains in India
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Answer:
The FCI purchases wheat and rice from the farmers in states where there is surplus production. The farmers are paid a pre-announced price for their crops. This price is called Minimum Support Price {MSP}. The increase in MSP raises the procurement of foodgrains and maintenance cost of procuring foodgrains by the government. {2} It also raises transportation and storage costs of the FCI. {3} The procurement is concentrated in a few prosperous regions e.g., Punjab, Haryana, Andhra Pradesh, etc. and mainly of two cropswheat and rice. So, the increase in MSP has induced farmers to divert land from production of coarse grains which is the staple food of the poor, to the production of wheat and rice. {4} The intensive utilisation of water in the cultivation of rice has led to environmental degradation and fall in the water level. This is threatening the sustainability of the agricultural development in these states. {5} This also increases a burden of subsidy on government treasury.
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