Question
Consider the following statements regarding the Minimum
Support Price (MSP) system in India: I. MSP is the rate at which the government purchases crops from farmers. II. It is based on a calculation of at least one-and-a-half times the cost of production incurred by farmers. III. MSP is fixed thrice a year on the recommendations of the Commission for Agricultural Costs and Prices (CACP). Which of the statements given above is/are not correct?Solution
MSP is the rate at which the government purchases crops from farmers, and is based on a calculation of at least one-and-a-half times the cost of production incurred by the farmers. Union Budget for 2018-19 had announced that MSP would be kept at levels of 1.5 the cost of production. MSP is fixed twice a year on the recommendations of the CACP, which is a statutory body.
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