GS Paper III 2018 · Q3
10 marks · 150 words Farm subsidies, MSP, PDS & food security X-Ray · Core #35What do you mean by Minimum Support Price (MSP)? How will MSP rescue the farmers from the low income trap?
Approach · directive: “what / how”
What it asks · Define MSP and explain how a remunerative price can help lift farmers out of a low-income trap, noting the conditions and limits.
It asks 2 things — answer each
- What: define MSP and explain how it is fixed
- How: explain how MSP can lift farmers out of the low-income trap, and the conditions that make it work
Open with · MSP is the floor price at which the government stands ready to buy notified crops, announced before sowing on CACP's advice; an average agricultural household earned only ₹10,218 a month in 2018-19 (NSO).
Cover
- Definition: floor price at which the government buys notified crops, announced before sowing on CACP's advice; 23 crops; factors include cost, demand and supply, market trends, parity.
- Context: average agricultural household income ₹10,218 a month in 2018-19 (NSO Situation Assessment Survey, PIB).
- Cost basis: Budget 2018-19 promised 1.5 times production cost; Swaminathan wanted C2 + 50 per cent; kharif 2018 used A2+FL.
- How it helps: price floor cuts distress sales, assured returns enable investment and credit, higher MSPs for pulses and oilseeds aid diversification.
- Reach: Shanta Kumar Committee (2015) found only 6 per cent of farmers sold wheat or paddy to a procurement agency; over 86 per cent are small and marginal.
- Delivery: PM-AASHA (September 2018) with Price Support, Price Deficiency Payment and Private Procurement schemes; e-NAM and rural markets.
- Risks: fiscal cost, bias towards rice and wheat, stock build-up; needs lower costs, diversification and non-farm jobs.
Close with · MSP breaks the price risk behind low incomes only when procurement reaches small farmers; with e-NAM, lower costs, diversification and non-farm jobs, a price floor becomes an income floor.
Add value (verified)
- Budget 2018-19 committed MSP at least one and a half times production cost for unannounced kharif crops, and the same speech admitted that raising MSP is not enough unless farmers actually receive it.Union Budget 2018-19: Budget Speech of the Finance Minister, Ministry of Finance (paras 13-14) ↗“Government has decided to keep MSP for the all unannounced crops of kharif at least at one and half times of their production cost.”
- The High Level Committee on restructuring FCI (chair Shanta Kumar, 2015) found that only 6 per cent of farmers had gained from selling wheat and paddy directly to a procurement agency.PIB: Recommendations of High Level Committee on restructuring of FCI (January 2015) ↗“Together, they account for only 6 percent of total farmers in the country, who have gained from selling wheat and paddy directly to any procurement agency.”
- NSO's Situation Assessment Survey (NSS 77th round) put the average monthly income of an agricultural household at ₹10,218 in 2018-19, up from ₹6,426 in 2012-13.PIB: Farmers' Monthly Income jumps to Rs. 10,218 in 2018-19 from Rs. 6,426 in 2012-13: NSO Survey (3 February 2023) ↗“Farmers' Monthly Income jumps to Rs. 10,218 in 2018-19 from Rs. 6,426 in 2012-13: NSO Survey”
- The Cabinet approved PM-AASHA on 12 September 2018 to deliver the Budget 2018 promise of remunerative prices; it comprises the Price Support Scheme, the Price Deficiency Payment Scheme and a pilot Private Procurement and Stockist Scheme.PMINDIA: Cabinet approves New Umbrella Scheme 'Pradhan Mantri Annadata Aay SanraksHan Abhiyan' (PM-AASHA), 12 September 2018 ↗“The new Umbrella Scheme includes the mechanism of ensuring remunerative prices to the farmers and is comprised of • Price Support Scheme (PSS), • Price Deficiency Payment Scheme (PDPS) • Pilot of Private Procurement & Stockist Scheme (PPPS).”
Question: UPSC's CS (Main) 2018, GS Paper III — paper ↗. Approach: Minimalist IAS, checked 3 Oct 2026 (how we verify) — UPSC publishes no model answers. ·
Model answer· 222words · Minimalist IAS
Minimum Support Price is the floor price at which the government stands ready to buy notified crops, announced before sowing on the advice of the CACP. An average agricultural household earned only ₹10,218 a month in 2018-19 (NSO).
What MSP means
- Coverage and basis: 23 crops; CACP weighs cost of production, demand and supply, market trends and inter-crop parity.
- Cost formula: Budget 2018-19 promised 1.5 times production cost; Swaminathan wanted C2 + 50%, while kharif 2018 used the narrower A2+FL.
How MSP can rescue farmers from the low-income trap
- Price floor: removes fear of a post-harvest crash and cuts distress sales.
- Investment: assured returns let farmers buy quality seed and technology, raising productivity.
- Diversification: higher MSPs for pulses and oilseeds nudge farmers out of low-value crops.
- Assured floor
- fewer distress sales
- investment
- higher productivity
- income above the trap
Conditions that make MSP work
- Reach: the Shanta Kumar Committee (2015) found only 6% of farmers had sold wheat or paddy to a procurement agency; over 86% are small and marginal.
- Delivery: PM-AASHA (September 2018) added price-deficiency payments and private procurement to physical purchase.
- Risks: fiscal cost, a bias towards rice and wheat, stock build-up.
MSP breaks the price risk behind low incomes only when procurement reaches small farmers; with e-NAM, lower costs, diversification and non-farm jobs, a price floor becomes an income floor.
Prepared by Minimalist IAS to the answer standard of Shivam Singh (mentor, 7 years) · facts checked against official sources (how we verify) · updated 3 Oct 2026. UPSC publishes no model answers: compare your structure and coverage with this, then write your own.
