What is minimum price ceiling? Explain its implications?
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Minimum price ceiling or minimum support price (MSP) is the floor or lowest price of a commodity at which it can be purchased. The Government declares these prices for commodities from time to time. MSP is normally declared for agricultural commodities.
The idea behind declaring MSP is to ensure that the farmer gets a remunerative price at all times, even during seasons of bountiful harvest. If left to the forces of demand and supply, the price would fall in seasons of good harvest; hence, this mechanism has been adopted to support the farmer at all times.
The idea behind declaring MSP is to ensure that the farmer gets a remunerative price at all times, even during seasons of bountiful harvest. If left to the forces of demand and supply, the price would fall in seasons of good harvest; hence, this mechanism has been adopted to support the farmer at all times.
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