MINIMUM SUPPORT PRICES (MSP)
The Government of India started announcing the Minimum Support Prices
(MSP in 1966 - 67) for wheat which was expanded to cover many more crops in the coming years.
» It is minimum prices of which the government will purchase farmers crops - whatever may be the market prices for the corps.
PROCUREMENT PRICES
Procurement prices were announced higher than the MSP since the government was lagging behind when its food grain procurement required to maintain the buffer stocks.
ISSUE PRICE
The price at which food grains are allowed by the government to off take from the FCI this is the price at which the FCI sells its food grains. The FCI has been incurring huge losses in the form of food subsidies.
BUFFER STOCK
India has policy of maintaining a minimum reserve of food grains (only for wheat and rice). So that food is available throughout the country at affordable prices around the year.
» The main supply from here goes to The Public Distribution System (now TPDS) and at times goes to the open market to check the rising prices if needed.
DECENTRALISED PROCUREMENT SCHEME
The Decentralised Procurement Scheme of the government of India that is in operation since 1997.
» Under this response from the state, this scheme the designated states procure, store and also issue food grains under TPDS.
» The Decentralised System of Procurement, helps to cover more farmers under the MSP operations, improves efficiency of the PDS, provides varieties of food grains more suitable to local taste, and reduces the transportation costs of the FCI.
SUGAR SECTOR REFORMS
India is the largest consumer and second largest producer of sugar after Brazil.
» Sugar and sugarcane are notified as essential commodities under the essential commodities Act 1955.
» The suger industry in India is over regulated and prone to cyclicality due to price interventions.
» A report on regulation of the sugar sector in India: The way forward has been submitted by the committee under the chairmanship of Dr. C. Rangarajan, Chairman of the Economic Advisory Council to Prime Minister the measures suggested are as follows.
(i) Phasing out cane reservation area.
(ii) Dispensing with minimum distance criteria.
(iii) Dispensing with the levy sugar system.
(iv) State that want to provide sugar under the PDS may requirement, fix the issue price and subsidize from their own budgets.
(v) Dispensing with the regulated release mechanism (of non - levy) Sugar.
(vi) Stable trade policy.
(vii) No quantitative or movement restrictions on by product like molasses and ethanol and dispensing with compulsory jute packing.
(vii) A stable, predictable and consistent policy reforms to be brought about in a fiscally neutral manner and issues considered for implementation in a phased manner.
EDIBLE OIL ECONOMY
India is one of the largest producers of oilseeds in the world.
» However, 50 percent of its domestic requirements are today, met through imports, out of which crude plamoil and the RBD (Refined Bleached and Deodorised) palmolein constitute about 77 percent and soyabean oil constitutes about 12 percent.
