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Effectiveness of Minimum Support Price Policy for Paddy in India with a Case Study of Punjab


  • Ali, Shayequa Z.
  • Sidhu, R.S.
  • Vatta, Kamal


The effectiveness of minimum support price (MSP) for paddy has been examined in different regions of India and its role and contribution towards production in surplus states like Punjab have been studied. Based on the secondary data spanning from 1980-81 to 2006-07, the deviations of farm harvest prices from the MSP have been used as a measure of ineffectiveness and the impact of prices and technology on rice productivity has been examined by using the simultaneous equation model. While the MSP policy has been very effective in surplus producing states like Punjab and Andhra Pradesh, it has not been so effective in the deficit states. In Punjab, the effective implementation of the price policy has helped in improving the production and productivity of rice. Non-price factors such as use of improved varieties, availability of assured irrigation at subsidized rates and high fertilizer-use have been found to be significant determinants of growth in rice production. The study has suggested that without losing sight of the environmental concerns, the Punjab model can be used for increasing the production of rice in other potential areas of the country.

Suggested Citation

  • Ali, Shayequa Z. & Sidhu, R.S. & Vatta, Kamal, 2012. "Effectiveness of Minimum Support Price Policy for Paddy in India with a Case Study of Punjab," Agricultural Economics Research Review, Agricultural Economics Research Association (India), vol. 25(2).
  • Handle: RePEc:ags:aerrae:137357

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    Cited by:

    1. repec:bla:asiaps:v:4:y:2017:i:3:p:514-526 is not listed on IDEAS
    2. Singh, Karam, 2014. "Presidential Address: Challenges of Food Security in India: Role of Food Policy and Technology," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 69(1).
    3. Gathorne-Hardy, Alfred & Reddy, D. Narasimha & Venkatanarayana, M. & Harriss-White, Barbara, 2016. "System of Rice Intensification provides environmental and economic gains but at the expense of social sustainability — A multidisciplinary analysis in India," Agricultural Systems, Elsevier, vol. 143(C), pages 159-168.

    More about this item


    Minimum support price; paddy; effectiveness of MSP; Agricultural and Food Policy; Q18; E64;

    JEL classification:

    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
    • E64 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Incomes Policy; Price Policy


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