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Effectiveness of minimum support price policy for wheat : A study of the bimaru states of India

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  • Singh, Anushka

Abstract

The present study aims to analyze the effectiveness of Minimum Support Price Policy (MSP) for wheat in the BIMARU (Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh) states of India. Based on the secondary data spanning from 2006-07 to 2016-17, the deviations of Farm Harvest Prices (FHP) from the Minimum Support Prices (MSP) have been used as a measure of effectiveness of MSP and classified into positive and negative deviations. Also, since MSPs of crops also provide incentives to farmers to increase the overall productivity of their crops besides ensuring remunerative prices to farmers for their produce, it has been tried to study the relationship of MSP with area under cultivation, production and productivity of wheat in the BIMARU states through correlational analysis. While the MSP policy has been very effective in Madhya Pradesh and Rajasthan and thus showing strong to moderate positive relation with acreage allocation, production and productivity of wheat, it has not been so effective in Bihar and Uttar Pradesh thus showing positive but weak relation with production and productivity in UP and weak negative relation with area in Bihar. Thus, it reflects that because of untimely government interventions and inefficient market and procurement conditions the farmers of UP and Bihar are not able to take full benefit of the agricultural price policy that MP and Rajasthan have been able to utilize. Therefore there must be robust procurement machinery so that the government can provide timely and targeted intervention to check the falling market prices and make MSP policy effective and efficient.

Suggested Citation

  • Singh, Anushka, 2015. "Effectiveness of minimum support price policy for wheat : A study of the bimaru states of India," Indian Journal of Agricultural Marketing, Indian Society of Agricultural Marketing, vol. 35(1).
    • Handle: RePEc:ags:injagm:399718
    DOI: 10.22004/ag.econ.399718
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