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?
Explanation
Statement 1 is incorrect: Public procurement at MSP is not unlimited. Under schemes like PM-AASHA (Pradhan Mantri Annadata Aay Sanrakshan Abhiyan), procurement of pulses and oilseeds by Central Nodal Agencies (such as NAFED) is typically capped at a statutory ceiling of 25% of the state’s actual production for the season. Even for paddy and wheat, procurement depends on state procurement targets, storage capacities, and marketable surpluses.
Statement 2 is incorrect: MSP is recommended nationwide by the Commission for Agricultural Costs and Prices (CACP) based on production cost formulas (such as A2+FL). Open-market prices are determined dynamically by demand, supply, rainfall conditions, and international commodity rates, frequently rising above the benchmark MSP during periods of shortage.
Therefore, neither statement is correct — Option D.