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How Efficient is the Price Support Scheme (PSS) for Pulses, Oilseeds, Cotton and Copra?

Author

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  • Brajesh Jha

    (Institute of Economic Growth, Delhi)

Abstract

In India price-support system is necessary on various accounts. Experience, however, suggests that minimum support prices (MSP) announced for 22 commodities are less defended for pulses, oilseeds, cotton and copra. Price support scheme (PSS) is often criticised as it is believed to crowd out private trade, it is associated with high social cost, and strengthens commodity price subsidy. To create evidence on the above, the PSS for noncereals is evaluated with secondary information from the concerned Ministry and procurement agency. The study found that the B-C ratios of PSS operation for a bulk of noncereals was more than one in the most of the reference years. The efficiency decreased in certain years when the international price of the commodity was low and the domestic market was less insulated. A comparison of PSS operation of non-cereals with cereals reported elsewhere showed that the former was more efficient than the latter. Available information did not support that PSS operation for non-cereals crowd out private trade in that commodity.

Suggested Citation

  • Brajesh Jha, 2019. "How Efficient is the Price Support Scheme (PSS) for Pulses, Oilseeds, Cotton and Copra?," IEG Working Papers 379, Institute of Economic Growth.
    • Handle: RePEc:awe:wpaper:379
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    References listed on IDEAS

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    1. AfDB AfDB, . "Annual Report 2012," Annual Report, African Development Bank, number 461.
    2. Jha, Brajesh & Mohapatra, B.B., 2003. "Liberalisation and Agricultural Prices: Some Disconcerting Trends," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 58(3), September.
    3. Sharma, Vijay Paul, 2012. "Food Subsidy in India: Trends, Causes and Policy Reform Options," IIMA Working Papers WP2012-08-02, Indian Institute of Management Ahmedabad, Research and Publication Department.
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