What is the need of the MSP to protect farmers from sudden price shocks? Do you think legalization of MSP can ensure farmers from sudden price shocks? What are the other measures taken to make MSP procurement effective?

It is a price guaranteed for procurement of agricultural crops announced by government to ensure remunerative prices to farmers. It is aimed at ensuring that farmers remain insulated from sudden price shocks and also support food security via Public Distribution System. Legislation of MSP: MSP legislation has its own sets of benefits and challenges.

Benefits of MSP legislation: (1) It will ensure compulsory procurement via CACP, proclaimed laws/JSP only to 67% farmers that too for rice and wheat and not well developed for other crops. (2) May promote crop diversification as crops like millets, pulses will also be guaranteed. (3) Ensure risk management for farmers as they will be assured procurement => reduce rural poverty. Issues in MSP localization: (1) High fiscal burden - 12% of the budget for agriculture subsidies already. (2) Environmental sustainability as crops like edible, since are water guzzlers. (3) Parallel structure classified as over-registered on ground water - cites. (4) Challenges of WTO as subsidy may exceed bilateral legal agreement under Bali round. (5) Often MSP benefits are controlled by large farmers and small and marginal farmers 86% of total farmers.

Other ways MSP has been implemented: (1) Cuing for decentralized procurement via supply support to farmers, like PM-KSAN, NABARD is History Park and WTO is compliment instead of MSP support. (2) Crop diversification by announcing higher MSP for millets, pulses, etc. (3) Mixed farming by promoting fisheries, poultry to diversify farm income. (4) Price support schemes like PM-ASHA via Direct Benefit Transfer. Given the huge fiscal cost of MSP legislation, the above alternative can be the way forward.