what are the problems related to high MSP of foodgrains?(Food Security)
Answers
Explanation:
MSP (minimum support price ):- was started as a safety cover for farmers to save them from the dropping prices at the time of selling their produce. In a particular situation when there is bumper production the prices will fall and the farmer have to suffer from loss. So government provides them with a minimum price to escape from this loss. problem come when the market prices are low and the government is pressurised to raise the MSP. To a certain extent, it won't hamper the economic structure. But when the gap between market price and MSP increases, it creates budget deficit. Because it is a subsidy programme, government has to bear the loss.
Answer:
it increases the transportation and storage cost of FCI.
increase in MSP has induced farmers to divert the land from production of coarse grain which is the staple diet of many poor people to production of wheat and rice.
it also increases burden of subsidy on government treasury.
the intensive use of water for rice cultivation has lead to fall of ground water level
is also raises the maintenance cost of procuring food grains by th govt.
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