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LATEST NEWS UPDATES | Explained: The cost of guaranteed MSP -Harish Damodaran

Explained: The cost of guaranteed MSP -Harish Damodaran

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published Published on Jan 21, 2021   modified Modified on Jan 24, 2021

-The Indian Express

Apart from repeal of farm laws, farmers are demanding guaranteed minimum support prices, which have no legal backing. A look at what the implications would be if the govt did provide the guarantee

Farmer unions protesting on Delhi’s borders are raising two fundamental demands. The first is for repealing the three agricultural reform laws enacted by the Centre. The second is to provide legal guarantee for the minimum support prices (MSPs) that the Centre declares for various crops every year. Currently, there is no statutory backing for these prices or any law mandating their implementation. What are the implications if the government were to accept the farmer unions’ demand?

* How can MSP be made legally binding?

There are two ways it can be done.

The first is to force private buyers to pay it. In this case, no crop can be purchased below the MSP, which would also act as the floor price for bidding in mandi auctions. There’s already a precedent: In sugarcane, mills are required by law to pay growers the Centre’s “fair and remunerative price” – Uttar Pradesh and Haryana fix even higher “state advised prices” – within 14 days of supply. In no other crop is the compulsion to pay the government-announced MSP thrust on the private trade/industry.

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The Indian Express, 21 January, 2021, https://indianexpress.com/article/explained/explained-the-cost-of-guaranteed-msp-7157934/?fbclid=IwAR0JV89jDfEnk0PrjzqppbRONd8X7dOR5To8nE5G-N3vCXh0SIZmRNwCSwA


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