2018 · GS Paper 3 · Q3 · 10 marks
What do you mean by Minimum Support Price (MSP)? How will MSP rescue the farmers from the low income trap?
In short
MSP is the price, recommended by the CACP and announced before sowing, at which the government buys a crop, and by stopping distress sales it breaks the low-price entry point of the low income trap. Since 2018-19 every MSP is at least 1.5 times the A2+FL cost.
Model answer
Ghissu Editorial · Verified 4 Oct 2026 · 275 words
Definition
MSP is the price at which the government buys a crop from farmers, announced before sowing as a floor against price crashes.
Fixing Process
The CACP recommends MSPs for 22 crops on cost, demand, price trends and parity, and the Cabinet Committee on Economic Affairs approves them; since 2018-19 each is at least 1.5 times the A2+FL cost.
Delivery Channels
FCI procures rice and wheat, and NAFED buys pulses and oilseeds under PM-AASHA.
Assured Price Floor
MSP stops distress sales at harvest; foodgrain MSP payouts rose from ₹1.06 lakh crore in 2014-15 to ₹3.33 lakh crore in 2024-25 (PIB, 2025).
Signal to Invest
A known price lets farmers invest in seed and irrigation, as in the Green Revolution.
Steering Crop Choice
Higher pulse MSPs and a buffer stock helped pulses output reach a record in 2016-17.
Reach Decides Rescue
Only about 6% of farmers sell at MSP (Shanta Kumar Committee, 2015), so procurement must reach small farmers.
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This chapter in the exam
Farm Subsidies and Minimum Support Prices8 questions
Asked in 8 of 14 sittings since 2013
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Question from the official UPSC Civil Services (Main) Examination 2018 paper. Answer written by Ghissu's engine and checked against our editorial standards. Found an error? Tell us and we correct it within 48 hours.