The Effect of Incrementation in the MSP of the Kharif Crops on the Indian Economy

Abstract

The main objective of the author was to critically analyze the effect of a rise in MSP rates of Kharif crops on farmers, on the performance of the Indian economy, the effect of the same on various sectors of the Indian society, and on various other aspects. The methods of doing so have been through readings of secondary data (case studies, news articles), and primary sources such as questionnaires, interviews with knowledgeable individuals. Some key findings are that the hike in MSP can result in inflation due to which, although farmers enjoy a higher income, they may not have greater saving due to the rise in the price of other necessities, the other sectors are set to benefit from this move of the government, this move will add an additional burden on the government of 150 million USD and that this move only helps 7% of the Indian farmers while the rest are unaffected by this. This study also deciphers public opinion on the subject, showing that about 70% of the respondents believe that the policy was beneficial to the economy. The paper critically evaluates this move by the government showing its implications on the economy, farmers, etc.