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

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

Abstract

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
    DOI: 10.22004/ag.econ.137357
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    References listed on IDEAS

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    1. Singh, Inder Pal & Bal, H. S. & Singh, Bant & Kumar, Narinder, 1986. "Price Policy for Wheat and Paddy Vis-A-Vis Equity in Punjab," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 41(4), October.
    2. Acharya, S.S., 1997. "Agricultural Price Policy and Development: Some Facts and Emerging Issues," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 52(1), March.
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    1. K.S. Aditya & S.P. Subash & K.V. Praveen & M.L. Nithyashree & N. Bhuvana & Akriti Sharma, 2017. "Awareness about Minimum Support Price and Its Impact on Diversification Decision of Farmers in India," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 4(3), pages 514-526, September.
    2. Sree Rama Murthy Y, 2020. "Cash Settled Commodity Option Contracts as an Alternative to Minimum Support Price: A Mechanism to Alleviate Farmer Distress," Information Management and Business Review, AMH International, vol. 11(4), pages 50-53.
    3. Bora, K & Bhattacharya, S & Niyati, S, 2018. "Paddy prices and marketing agencies in India: an empirical analysis of effectiveness of public procurement," Agricultural Economics Research Review, Agricultural Economics Research Association (India), vol. 31(2).
    4. Ramesh Chandra Das, 2021. "Does Minimum Support Price Have Long-Run Associations and Short-Run Interplays with Yield Rates and Quantities of Outputs? A Study on Food and Non-food Grains in India," Review of Market Integration, India Development Foundation, vol. 13(1), pages 42-65, April.
    5. Chandel, B S & Kumari, Binita, 2022. "How elastic is the profit to prices of output and the variable inputs? Some insights from paddy cultivation in India," Agricultural Economics Research Review, Agricultural Economics Research Association (India), vol. 35(Conferenc), December.
    6. Min Su & Nico Heerink & Peter Oosterveer & Tao Tan & Shuyi Feng, 2021. "Impacts of China’s Minimum Grain Procurement Price Program on Agrochemical Use: A Household-Level Analysis," Agriculture, MDPI, vol. 11(10), pages 1-20, September.
    7. Jana, Sebak Kumar & Pal, Barun Deb & Manna, Siddhartha, 2023. "A Study on Participation of Farmers in Government e-Procurement of Paddy in West Bengal, India: Application of Double Hurdle Model," MPRA Paper 118027, University Library of Munich, Germany.
    8. Morales, Luis Emilio & Balie, Jean & Magrini, Emiliano, 2021. "How has the minimum support price policy of India affected cross-commodity price linkages?," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 24(2), February.
    9. Jingdong Li & Qingning Lin, 2022. "Can the Adjustment of China’s Grain Purchase and Storage Policy Improve Its Green Productivity?," IJERPH, MDPI, vol. 19(10), pages 1-24, May.
    10. 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), pages 1-9.
    11. 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.
    12. Srinivasa, Aditya Korekallu & Praveen, K.V. & Subash, S.P. & Nithyashree, ML & Jha, Girish Kumar, 2021. "Does a Farmer’s Knowledge of Minimum Support Price (MSP) Affect the Farm-Gate Price? Evidence from India," 2021 Conference, August 17-31, 2021, Virtual 315205, International Association of Agricultural Economists.

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    Keywords

    Agricultural and Food Policy;

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