Consider the following statements:1. In the case of all cereals, pulses and oil-seeds, the procurement at Minimum Support Price (MSP) is unlimited in any State/UT of India.2. In the case of cereals and pulses, the MSP is fixed in any State/ UT at a level to which the market price will never rise.Which of the statements given above is/are correct?
✓ Correct answer: d) Neither 1 nor 2
ExplanationThe MSP is recommended by the Commission for Agri- cultural Costs and Prices and is announced by the Cabinet Com- mittee on Economic Affairs.The main objectives of establishing the MSP are :To protect farmers from distress salesTo procure food grains for the public distribution system (PDS).Statement 1 is incorrect : While the government does ensure procurement at MSP for certain crops, the procurement is not unlimited.There are limits to the amount that can be procured at MSP, and these limits are determined by the government’s pro- curement policies and the capacity of procurement agencies like the Food Corporation of India (FCI).The government may also limit procurement based on market conditions, storage capacity, and other factors.Statement 2 is incorrect : MSP is the minimum price at which the government purchases crops, but it does not ensure that the market price will never surpass the MSP.Market prices can ex- ceed the MSP due to factors like demand, supply, and overall mar- ket conditions.While MSP affects market prices, it is not the only factor determining th
Practice more Economy PYQs
Attempt a free 10-question quiz or browse the full Economy previous-year-question bank with instant answers and explanations.
📈 Economy PYQs →