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UPSC Prelims 2020 Paper-1 📅 04 Oct, 2020

Consider the following statements:
1. In the case of all cereals, pulses and oil-seeds, the procurement at Minimum Support Price (MSP) is unlimited in any State/UT of India.
2. In the case of cereals and pulses, the MSP is fixed in any State/UT at a level to which the market price will never rise.
Which of the statements given above is/are correct?

A
1 only
B
2 only
C
Both 1 and 2
D
Neither 1 nor 2
Result Summary
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UPSC Prelims
2020 • 04 Oct, 2020 • Paper-1
Consider the following statements:
1. In the case of all cereals, pulses and oil-seeds, the procurement at Minimum Support Price (MSP) is unlimited in any State/UT of India.
2. In the case of cereals and pulses, the MSP is fixed in any State/UT at a level to which the market price will never rise.
Which of the statements given above is/are correct?
Correct Answer
Neither 1 nor 2
Procurement Limits Analysis: While the government announces MSP for over 20 crops, actual procurement operations are severely constrained by infrastructure and ......
Ref/Book : UPSC Prelims 2020
Ref. Subject Economy
Chapter -
Ref. Topic Agriculture Pricing
Pg. No -
💡 Analysis & Explanation
Procurement Limits Analysis ▼
While the government announces MSP for over 20 crops, actual procurement operations are severely constrained by infrastructure and budget. Procurement is practically non-existent for many oilseeds in several states, and even for staple cereals, it is subject to quantitative ceilings per farmer under specific state policies. It is absolutely not 'unlimited' across all specified crops pan-India. Statement 1 is false.
Pricing Strategy Analysis ▼
The fundamental purpose of MSP is to act as an economic safety net or floor price to protect farmers during bumper harvests. Open market prices frequently rise well above the declared MSP during periods of high demand or low supply. Claiming the market price will 'never rise' to the MSP level is economically illogical. Statement 2 is false.
Conclusion ▼
Both statements contain absolute claims that fail real-world economic testing.
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