As announced in the Union Budget, 2018-19, the Government of India fixes Minimum Support Price (MSP) of crops at a level of at least ______ times of the all India weighted average cost of production.
1.5
Let's analyze the question regarding the Minimum Support Price (MSP) for crops in India, based on the announcement made in the Union Budget 2018-19.
The question asks about the specific level at which the Government of India fixed the Minimum Support Price (MSP) relative to the all India weighted average cost of production, as stated in the 2018-19 budget. The Minimum Support Price (MSP) is a form of market intervention by the Government of India to insure agricultural producers against any sharp fall in farm prices. The basic idea behind MSP is to protect farmers when market prices fall below the cost of production.
Understanding Minimum Support Price (MSP) and Cost of Production
The Minimum Support Price (MSP) is announced by the government for certain crops before the sowing season, based on the recommendations of the Commission for Agricultural Costs and Prices (CACP). The CACP considers various factors when recommending MSP, including the cost of production, changes in input prices, market price trends, demand and supply, and the likely effect of MSP on the general price level.
The 'cost of production' is a crucial factor. Various cost concepts are used in agricultural economics, but typically, the CACP refers to different cost categories when evaluating MSP. In the context of the 2018-19 budget announcement, the focus was on ensuring a return over the cost of production.
Union Budget 2018-19 Announcement on MSP
In the Union Budget presented on February 1, 2018, the Government of India made a significant announcement regarding the Minimum Support Price (MSP). The Finance Minister stated that the government would aim to fix the MSP for all notified crops at a level that is at least 1.5 times the cost of production.
This was intended to provide a guaranteed return to farmers and address long-standing demands for remunerative prices for their produce. The commitment was to ensure that the MSP would cover the cost of production and provide a significant margin over it.
Analyzing the Options
The question asks for the multiplier announced in the Union Budget 2018-19.
- 1.1 times
- 1.7 times
- 1.5 times
- 1.2 times
Based on the announcement in the Union Budget 2018-19, the government committed to fixing the MSP at a level of at least 1.5 times the all India weighted average cost of production.
Conclusion
The commitment made in the Union Budget 2018-19 was to set the Minimum Support Price (MSP) at a level of at least 1.5 times the cost of production. This specific figure of 1.5 times was widely reported and discussed as a key policy measure to support farmers.
| Budget Year | MSP Commitment relative to Cost of Production |
|---|---|
| Union Budget 2018-19 | At least 1.5 times the cost of production |
Therefore, the correct figure as announced in the Union Budget 2018-19 is 1.5 times.
Revision Table: Key Facts on MSP and Budget 2018-19
| Topic | Detail |
|---|---|
| Minimum Support Price (MSP) | Government intervention to protect farmers from price falls. |
| Union Budget 2018-19 Announcement | Commitment to fix MSP at a certain level relative to cost. |
| Target Multiplier | At least 1.5 times the all India weighted average cost of production. |
| Purpose | Ensure remunerative prices for farmers, cover cost of production. |
Additional Information on MSP and Agricultural Policy
The policy of Minimum Support Price (MSP) is a crucial part of India's agricultural policy. It aims to provide a price floor for major agricultural crops, ensuring that farmers receive a minimum income even if market prices are low. The commitment in the 2018-19 budget was a formal declaration of a specific target for this price floor relative to the cost incurred by farmers.
It's important to note that there are different definitions of 'cost of production' used by the CACP, such as A2, A2+FL, and C2. The 1.5 times formula was intended to be applied to the A2+FL cost, which includes all paid-out costs plus the imputed value of family labour. The actual implementation and calculation methods have been subjects of ongoing discussion and debate.
The MSP policy covers a range of crops, including cereals, pulses, oilseeds, and commercial crops. The number of crops covered and the specific MSP rates are announced by the government for each cropping season (Kharif and Rabi).
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